MASTER 
NEGATIVE 

NO.  94-82002 


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Author: 


ant,  John  Collins 


I  III  ^#  ■ 


The  business  man's 
commercial  law  and 

Place: 

Buffalo 

Date: 

1890 


%-'k9.oo^-^ 


MASTER   NEGATIVE   # 


COLUMBIA  UNrVERSITY  LIBRARrES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


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Bryant,  John  C  ollins 

The  business  man's  commercial  law  and  business  forms 
combined.  A  vade-mecum  for  the  counting  house.  By 
J.  C.  Bryant  ...  Ed.  bv  the  Hon.  Geo.  W.  Clinton  ... 
Buffalo,  N.  Y.,  J.  C.  Bryant,  V883,    1390 . 

206  p..  1  1.,  54  p.  incl.  front.,  forms.     2^"'". 

"Tenth  edition.  *♦ 


.  1.  Commercial  law— U.  S.        i.  Clinton.  C.corge  William,  1807-1885,  ed. 


Library  of  Congress 
Copyright     1882:   14671 


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THE  BUSINESS  MAJSTS 


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THE  LATE  HON.  GEORGE  W.  CLINTON. 


COMMERCIAL  LAW 


AND 


BUSINESS  FORMS 


COMBINED. 


A  VADE^MECUM  FOR  THE   GO  UNTIN Q  HOUSE, 


BY 


J.  O.  BEYAISTT,  M.  D. 

n«81DBNT  OF  THE  BRYANT  &  BTRATTON  BUFFALO  BUSINESS  COLLEGE,  AUTHOR  OF 

BBY ant's  new  series  OP  BOOK-KEEPING. 


EDITED  BY  THE 


Hon.  GEO.  W.  CLINTON, 

LATE  CHIEF  JUDGE  BUPKBIOB  COUBT,  BUFFALO,  H.  T. 


TENTH   EDITION. 


>«       • 


J  «  '      t  « 


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RU.P.F-A'LC,  N.  Y. 

,      PUBLISHED    BY    J.    C.    BRYANT. 

•   '1890. 


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Sotered  according  to  Act  of  Oongress,  in  the  year  1383.  bf 

J.  C.  BRYANT,  M.  D^ 
Ultbe  Office  of  the  Librarian  of  Congress,  at  WastdngtOn. 


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PREFATORY. 


■*  •  » 


The  Book. — It  is  largely  the  work  of  a  gentleman  the  greater  portion  of 
whose  life  has  been  devoted  to  educating  young  men  for  active  business, 
and  in  aiding  commerce,  and  whose  success  in  these  regards  has  been  of 
great  service  to  our  country.  To  cooperate  with  him  is  a  pleasure;  and  this 
introductory  matter  is  prepared  in  accordance  with  his  suggestions  and  at 
his  request.  The  book  embraces,  succinctly,  the  great  body  of  the  laws, 
a  knowledge  of  which  is  essential  to  the  proper  conduct  not  only  of 
commerce,  but  of  extended  business  of  any  and  every  kind,  and  embodies 
the  usual  and  approved  forms  of  the  instruments  in  use  for  their  transac- 
tion. A  knowledge  of  the  law  which  it  embodies  will  not,  of  itself,  always 
insure  success  or  prevent  disaster ;  but  ignorance  of  it  brings  danger,  and  a 
departure  from  or  violation  of  it,  whether  ignorant  or  willful,  must  certainly 
result  in  loss,  if  not  in  utter  failure  and  disgrace.  To  the  aspirant  for 
honorable  place  in  the  business  world  it  will,  I  am  confident,  prove  a  strong 
helper  :  to  the  merchant,  the  manufacturer,  the  large  producer,  to  every 
one  who  has  the  conduct  of  a  large  business,  it  will  prove  a  safe  guide 
and  an  efficient  guard. 

Production  and  Commerce. — The  results  of  labor,  whether  intellectual 
or  material,  are  productions.  The  clergyman,  the  editor,  the  author, 
equally  with  the  artist,  the  artizan,  the  miner,  the  manufacturer  and  the 
farmer,  are  producers.  The  products  of  their  industry,  with  the  spoils 
wrested  from  the  ocean  and  great  waters  of  the  earth,  like  the  mimimies 
of  the  Pharaohs,  are  subjects  of  sale ;  and  Commerce  transports  and  inter- 
changes them  the  wide  world  over. 

Money  and  Wealth. — Money  is  a  medium  of  exchange  —  a  representa- 
tive of  value.  Its  value  or  purchasing  power  fluctuates,  and  seems  dimin- 
ishing. A  dollar  in  pre-revolutionary  times  would  buy  more  of  the  real 
wealth  of  the  world  than  it  would  now.  Those  products  of  physical, 
intellectual  and  spiritual  labor  which  comfort,  strengthen  and  maintain  the 

■       5 


I, 


6 


PREFACE. 


Vigor  of  the  body,  inform  the  mind,  and  elevate  the  soul  are  wealth. 
Were  our  soil  to  become  infertile  and  our  waters  barren,  our  country 
would  be  poor  indeed;  were  Homer  and  the  old  Classics  and  Shakespeare 
to  be  destroyed,  what  wealth  would  perish  ;  were  the  Bible  withdrawn 
from  this  glorious  world,  the  thick  and  hopeless  darkness  which  enshrouded 
it  before  the  coming  of  the  Saviour  would  return,  and  deepen  and  blot  out 
hope  and  joy  forever. 

Labor.— All  honor  to  the  toilers,  whether  on  land  or  water,  whether 
pallid  with  study  or  begrimed  with  sweat.      They  are  the  parents  and 
possessors  of  all  true  enjoyment,  and  Commerce  is  their  servant  and  their 
friend.    All  men  are,  by  nature,  born  free  and  equal.     They  are  equal  in 
the  sight  of  our  law  and  in  the  Creator's  love;  and  the  man  of  business,  or 
any  man.  who  forgets  this  great  truth,  is  false  to  our  Institutions  and 
mindless  of  Religion.     The  laborer,  equally  with  the  mUlionaire,  should 
enjoy  " ease  and  alternate  labor."    The  drones,  if  there  be  any  in  oar  busy 
country,  are  few.     There  can  be  no  high  and  pure  enjoyment  in  their  Uvea 
Wealth  is  power.     It  is.  as  Bacon  said.  "Like  manure,  and  must  be  scat- 
tered" to  be  useful.      If  applied  to  great,  good  ends,  it  brings  heavenly 
satisfaction,  and.  with  God's  blessing,  promotes  happiness.     If  hoarded,  or 
put  to  the  possessor's  personal  uses  only,  it  cankers  the  soul;  and  Scott's 
lines  apply  forcibly  to  him  who  so  basely  neglects  duty: 

"  Despite  his  titles,  power  and  pelf, 
The  wretch  concentred  all  in  self 
Living,  shall  forfeit  all  renown, 
And  doubly  dying,  shall  go  down 
To  the  vile  dnst  from  which  he  sprung, 
Unwept,  onhonored  and  unsung." 

Luxury.— If  this  be  voluptuousness,  or  a  free,  extravagant  indulgence  in 
the  pleasures  of  the  table,  in  equipage,  and  furniture,  and  dress,  the  higher 
the  tribute  it  pays  to  Commerce  and  the  Common  Treasury  the  better.  But, 
if  dainties  and  anything  deUghtf  ul  to  the  senses  be  luxuries,  the  more  widely 
they  are  dispersed,  and  the  cheaper  they  are  made,  the  better.  They  ought 
to  be  made  free  as  possible  to  the  poor  as  well  as  to  the  rich.  It  is  pleasant 
to  recall  the  fact  that  tea,  and  sugar,  and  coffee,  and  numberless  other  good 
things,  which  are  now  the  comforts  of  all  classes,  were  once  expensive  lux- 
uries. So  was  education.  We  may  thank  Commerce  for  cheapening  and 
making  them  attainable  by  the  poorest  in  our  land.     Then  again,  it  must 


I'BEFACE.  f 

be  remembered  that  the  extravagance  of  the  rich,  which  we  deplore  and  in- 
veigh afrainst  as  opposed  to  Spartan  simplicity  and  the  grim  frugality  of 
Cato,  while  it  neither  exalts  the  rich,  nor  gives  them  happiness  or  political 
power,  is,  in  truth,  a  patron  of  the  fine  arts,  an  incentive  to  invention  and 
industry,  and  the  main  support  of  myriads  of  hard  working  people. 

* 

Commerce,  Trade.  In  its  widest  meaning,  Commerce  includes  the  deal- 
ings of  one  class  of  a  community  with  another,  friendly  and  familiar  inter- 
change of  thoughts,  and  even  the  inspirations  of  heavenly  meditation. 

Thus  Milton  : 

"  Hail  divinest  Melancholy  I 
***** 
Come  pensive  Nun,  devout  and  pure. 
Sober,  steadfast  and  demure, 
Come,  but  keep  thy  wonted  state, 
With  even  step  and  musing  gait, 
And  looks  commercing  with  the  skies, 
Thy  rapt  soul  sitting  in  thine  eyes." 

But  Commerce,  and  Trade,  are  in  ordinary  use  confined  to  the  exchange 
of  merchandise.      They  differ,  apparently,  in  this,  that  while  Trade  may 
always  be  used  as  a  substitute  for  Commerce,  Commerce  cannot  be,  m  all 
cases,  substituted  for  Trade.     Commerce  is  always  grand  ;  Trade  is  often 
petty.     Commerce,  it  has  been  said,  refers  more  appropriately  to  trade 
carried  on  by  ships.     Traffic  within  States  is  Trade.     Individuals  trade  with 
each  other.     Trade  is  a  single  transaction  or  a  series  of  petty  ones.     Trade 
brings  wheat  and  corn  to  Chicago  and  Buffalo  and  gives  them  the  dignity 
of  markets  :  the  sending  of  their  stores  to  New- York  may  be  termed  Trade, 
or  Commerce,  indifferently  :   New- York  ships  them  to  the  markets  of  the 
old  world,  and  that  is  Commerce. 

The  Origin  of  Commerce. -Of  this  we  know  nothing  surely.  It  has 
been  said  thai  before  the  rise  of  Commerce,  the  only  intercourse  that  nations 
held  with  each  other  was  aggressive.  Petty  traffic  must  have  existed  in 
families  and  tribes  in  the  very  eariiest  times,  and  no  nation  can  ever  have 
subsisted  without  internal  trade.  The  lust  of  glory  and  the  thirst  for  gold 
have  made  nations  brutal  and  piracy  an  honorable  occupation  ;  but,  from 
very  early  times,  before  and  long  prior  to  the  time  of  Solomon,  Commerce 
was  busy  in  peaceful  intercourse  with  the  most  distant  nations. 

The  Regulation  of  Commerce  Generally. -The  Supreme  power  of 
a  State  regulates  and  controls  its  Commerce.     Commerce  is  mutual,  and 


*^ 


8  PREFACE. 

the  Commerce  of  one  Country  with  another  includes  the  interchange  — the 
importation  as  well  as  the  exportation  to  and  fro.  Commerce  includes  inter- 
course, and  the  power  of  a  State  to  regulate  Commerce  consequently  extends 
to  the  regulation  of  its  own  vessels,  to  enactments  for  the  comfort,  safety  and 
health  of  its  sailors,  for  the  safety  of  passengers,  and  the  punishment  of 
crimes  on  the  high  seas  and  its  own  waters.  Every  country  regulates  Com- 
merce by  imposing  duties  on  imports  ;  and,  while  it  permits  importation  in 
the  ships  of  all  friendly  nations,  jealously  confines  its  own  coasting  and  in- 
ternal trade  to  its  own  ships  and  vessels. 

The  Regulation  op  our  Commerce. —  The  Constitution  of  the  United 
States  [Art.  1,  §  8]  provides  that  the  Congress  shall  have  power  "To  regu- 
late Commerce  with  foreign  nations,  and  among  the  several  States,  and 
with  the  Indian  tribes,"  and  that  "The  judicial  power  of  the  United  States 
shall  extend  "  [among  other  things]  "to  all  cases  of  admiralty  and  maritime 
jurisdiction."  [Const.,  Art.  3,  §  1,  2].  There  can  be  no  doubt  as  to  the  con- 
struction or  meaning  of  the  power  to  regulate  Commerce  with  foreign  nations, 
and  the  Indian  tribes  :  but  the  nature  and  limits  of  the  power  to  regulate 
Commerce  between  the  several  States  are  claimed  to  be  matters  of  question. 
In  Great  Britain,  the  admiralty  jurisdiction  is  confined  to  waters  navigable 
from  the  sea  and  within  the  ebb  and  flow  of  its  tides.  The  Supreme  Court 
of  the  United  States  has  decided,  and  it  is  now  admitted  law,  that  the  ad- 
miralty jurisdiction  in  our  country  extends  to  our  great  rivers  so  far  as  actu- 
ally navigable  from  the  sea  and  to  our  great  chain  of  lakes  and  their  con- 
necting straits  or  rivers. 

Law. — The  books  vary  in  their  definitions  of  law.  Law,  in  its  most 
general  sense,  is  a  rule  of  action,  and  every  law,  when  capable  of  being 
violated,  has  its  sanction ;  that  is  to  say,  its  violation  brings  a  prescribed 
penalty  or  painful  consequence. 

Divine  Laws. —  Divine  Laws  are  impressed  by  God  upon  matter  or  pre- 
scribed for  man's  affection  and  conduct.  The  former  were  called  the  laws 
of  Nature :  We  infer  or  deduce  them  from  observation  and  call  them  science. 
To  deny  that  the  Being  who  imposed  can  modify,  change  and  abrogate 
kiem  is  a  denial  of  His  existence.  We  believe  that  they  exist  only  at  His 
pleasure  and  through  His  power.  TTae  laws  prescribed  for  human  action, 
are  indicated  by  the  consequences  of  their  violation,  and  give  rise  to  cau- 
tion, to  prudence,  to  temperance  in  all  things  and  the  avoidance  of  excess. 


PREFACE. 


9 


The  prescriptions  of  Religion  embrace  all  pure  morality,  incite  to  the 
practice  of  every  virtue,  and,  under  all  circumstances,  insure  tranquillity 
of  soul.  Were  its  reign  effectual  everywhere,  human  law  would  be  super- 
fluous  and  earth  an  Eden. 

Municipal  Law. — Municipal  Law  is  a  rule  of  action  prescribed  by  a  State. 
CoUectively,  it  is  the  entire  body  of  laws  of  the  State,  defining  its  own  pow- 
ers, providing  for  their  execution  and  its  own  continuance,  defining  the 
rights  and  duties  of  the  people  within  its  territory,  and  denouncing  punish- 
ments for  their  neglect  or  violation.     It  attempts  to  guard  life,  liberty  and 
property,  but  never  with  full,  unvarying  success.     It  recognizes  '*  duties  of 
imperfect  obligation ' '  which  it  cannot  and  does  not  attempt  to  enforce.    It 
punishes  open  crimes,  but  cannot  reach  the  bitter  fountams,  nor  cure  the 
distempered  lusts  from  which  they  flow.    It  fines,  imprisons,  disfranchises, 
hangs,  but  murder,  and  arson,  and  crimes  of  every  hue,  still  threaten  our 
liberties  and  deform  the  land.    Municipal  law  differs,  in  various  countries,  in 
its  origin  and  in  its  name.    It  differs,  too,  vastly,  in  substance,  in  autocratic, 
kingly  and  free  governments.     In  the  United  States,  every  State  govern- 
ment  and  its  law,  as  well  as  that  of  tlie  United  States  and  its  law,  is  but 
*•  the  People's  collected  wilL" 

Our  Municipal  LAw.-The  laws  of  the  several  States,  differ  as  they 
may  in  immaterial  instances  and  particulars,  are  not  substantially  variant 
With  the  exception  of  Louisiana,  which  has  a  Code  founded  on  the  CivU  or 
Roman  Law,  the  broad  foundation  of  the  law  of  all  the  States  is  the  cxmh- 
mon  law  of  England, 

The  Common  Law.-TMs  term  is  sometimes  used  to  distinguish  that 
part  of  the  law  of  England  which  has  grown  up  from  usage  from  Acts  of 
P.u4,ameDt    It  is  sometimes  called  the  unwritten  law,  while  the  Statutes 
are  called  the  written  law;  but,  in  troth,  both  are  written,  and  the  ancient 
customs  comprised  in  the  common  law  are  supposed  to  be,  in  large  part 
old  enactments,  the  records  of  which  have  perished.    It  is  said  to  rest  in 
maxims;  but  these  maxims  are  simply  moral,  hare  not  the  force  of  law 
and  are  in  practice,  often  widely  departed  from.     Its  great  boa^t  was  thai 
»  was  flexible  and  could  be  modified  and  varied  and  made  applicable  to 
the  new  changes  of  business  and  the  progress  of  the  race,  and  so  the  law 
It  was  said,  rests  in  the  bosom  of  the  judge.    Much  better  is  it  that  ii 
should  rest  in  the  sense  and  judgment  of  the  Legislature.     Statute  law  is 


10 


FKEFACB. 


more  flexible  than  the  common  law.  and  can  better  provide  that  certainty 
of  right,  of  duty,  and  of  decision  which  is  the  chief  est  security  of  our  righu 
and  liberties. 

This  term  is  sometimes  used  to  express  the  whole  law,  statutory  and  cus- 
ternary,  as  administered  in  the  most  ancient  law  Courts  of  England,  in  dls- 
tmction  from  that  administered  in  the  more  recent  Court  of  Chancery.  In 
the  United  States  it  is  used  as  signifying  the  whole  body  of  the  EngUsh 
law,  at  least  down  to  the  time  of  our  Revolution,  in  distinction  from  the 
dvil  law,  and  the  canon  law  so  far  as  adopted  in  England. 

Equity.— This  is  natural  justice  as  between  man  and  man.   It  is  declared 
and  defined  by  every  system  of  law,   but  no  human  power  has  ever 
enacted,  and  no  human  power  can  enforce,  it.     The  Institutes  of  Justinian 
declare:    "The  precepts  of  th3  Law  are  to  Uve  honestly,  to  hurt  no  one. 
to  give  to  every  one  his  due.''    This  last  is  a  maxim  of  the  common  law 
No  law  except  the  Divine  one  commands  it.     Equity  is  also  used  as  mean 
ing  the  body  of  the  English  Law  as  administered  by  its  Court  of  Chancery. 
That  court  sprang  from  the  necessity  of  affording  relief  which  was  not 
Utainable  in  the  Law  Courts,  and  attaining  justice  where  the  Law  Courts 
Were  poweriess.     It  recognized  the  equity  of  redemption  in  mortgages,  re- 
lieved against  fraud,  mistake  and  accident,  decreed  the  cancellation  and 
amendment  of  instruments,  rescinded  or  decreed  the  specific  performance 
of  contracts,  took  exclusive  jurisdiction  of  trusts  and  charities.     Its  juris- 
diction was  very  wide.     One  of  its  most  fruitful  maxims  was  that  he  who 
came  into  equity  for  relief,  must  do  equity  as  a  condition  of  obtaining  it. 
Its  procedure  and  process  were  different  from  those  of  the  Law  Courts,  and 
its  remedies  were  peculiar.     In  the  State  of  New- York,  and  nearly  every 
State  hi  the  Union,  and  in  the  United  States,  Law  and  Equity  jurisdictions 
are  happily  blended,  and  the  same  Courts  administer  both  law  and  equity. 

The  Civil  Law.— This  is  the  positive  municipal  Law  of  the  Roman  Em- 
pire as  collected  by  the  Emperor  Justinian,  and  published  by  his  authority. 
The  Codes  of  France,  of  Louisiana,  and  of  several  European  nations,  are 
adaptations  of  it  to  their  countries. 

The  Canon  Law.— This  is  the  public  and  general  Code  of  Laws  of  the 
Roman  Catholic  Church. 

Commercial  Law— sometimes  called  Mercantile  Law  and  the  Law  of 
Merchants.— This  is  said  to  be  "the  system  of  law  which  the  Courts  of 


PBEFACK. 


11 


England  and  the  United  States  apply  to  mercantile  contracts.  It  is  a 
branch  of  the  common  law,  inferior  in  importance  to  no  other,  and,  in 
many  respects,  quite  distinct  from  any  other.  The  principal  objects 
embraced  within  it  are  the  law  of  shipping,  including  that  of  marine 
insurance,  the  law  of  negotiable  bills  of  exchange,  and  promissory  notes, 
and  the  law  of  sales. "  This  book  aims  to  comprise  a  summary  of  this  law, 
and  of  other  titles  of  the  law,  of  equal  importance  to  large  producers  and 
mercantile  men. 

International  Law. — Commerce  is  largely  affected  by  it.  It  rests 
mainly  in  the  expositions  of  treaties  and  the  treatises  of  learned  jurists. 
It  prescribes  laws  touching  peace  and  war,  intercommunication,  the  rights 
of  neutrals  on  the  high  seas,  the  conditions  of  an  effectual  blockade,  etc. , 
etc.  It  is  a  great  pity  that  it  has  no  sanctions— no  tribunal  to  enforce  it  as 
between  nations.     The  last  argument  of  nations  is  War. 

Courts  op  Admiralty.— Their  jurisdiction  embraces  much  maritime 
law  —  such  as  the  enforcement  of  liens  of  seamen  for  their  wages,  and  of 
material,  men,  etc.,  upon  ships  and  vessels,  salvage,  etc.,  etc. 

Business  Success— How  to  be  sought.— A  thorough  knowledge  of  the 
contents  of  this  book  is  far  from  being  the  only  knowledge  —  extremely 
eflacient  as  it  must  be  —  needed  for  success.  Success  in  business  does  not 
mean  merely  the  acquisition  of  competence  or  wealth,  unless  they  be 
dignified  by  a  peaceful  conscience,  the  love  of  friends  and  the  respect  of 
community.  The  knowledge  of  and  obedience  to  every  human  law  will 
not  insure  these  better  blessings.  And  then,  again,  a  man  whose  conduct 
in  business  is  kept  strictly  within  and  measured  by  the  law,  however  able 
he  may  be,  is  in  great  danger  of  business  failure.  A  reputation  for 
honesty  beyond  law,  and  for  strict  integrity,  is  imperishable  capital  — it 
will  add  to  and  extend  his  business  — it  will  sustain  him  in  the  fluctuations 
of  trade,  and  make  his  fortunes  superior  to  accidental  reverses.  In  the  eye 
of  Honor,  a  just  debt  is  not  cancelled  by  the  Statute  of  Limitations,  and  a 
release  by  composition  of  one's  creditors  leaves  the  balances  to  be  paid  on 
the  return  of  prosperity. 

Accounts,  Order.— The  business  success  of  any  one  who  is  destitute  of 
order  and  ignorant  of  accounts  is  improbable  in  the  extreme,  and  its  occur- 
rence must  be  regarded  as  a  freak  of  Fortune,  akin  to  a  miracle.  A  great 
business  requires  a  great  intellect  for  its  due  conduct.     The  truly  mercar 


12 


PREFACE. 


tile  mind  demands  order,  and,  on  his  premises,  insists  upon  the  orderly- 
transaction  of  business,  and  the  preservation  and  arrangement  of  all  corre- 
spondence papers  and  instruments,  so  that  any  one  of  them,  however  an- 
cient, may  be  found  in  an  instant;  and  such  a  keeping  of  the  accounts  of 
stock,  of  sales,  of  cash,  that  he  may  have,  whenever  he  requires  it,  a  perfect 
balance  sheet,  or  a  particular  account  of  any  transaction  in  his  business. 
Without  order,  there  must  be  ignorance  and  confusion,  than  which  nothing 
can  be  more  embarrassing,  more  injurious  to  reputation,  or  more  fatal  to 
success. 

Conclusion.— To  the  proprietor  of  this  worthy  book  I  wish  the  joy  he 
will  tind  in  knowing  that  it  has  answered  the  honorable  ends  it  is  designed 
for.  I  hope  that  every  honest  student  of  it  may,  in  the  near  future,  look 
upon  it  as  a  chief  contributor  to  his  acquirement  of  honor  and  wealth  in 
the  business  of  the  world. 

G.  W.  CLINTON. 

Albany,  Sept.  1,  1882. 


TABLE  OF  GENERAL  SUBJECTS. 


Agency, 

Agreements  for  Personal  Services, 

Bailments,  . 

Contracts,    . 

Common  Carrier. 

Copyright, 

Fire  Insurance,  .        • 

Guaranty,   .        .        , 

Legal  Decisions, 

Lien,  .... 

Negotiable  Paper, 

Partnership,        .        , 

Prefatory,  . 

Sale  of  Personal  Property, 

Shipping,    . 

Stoppage  in  Transitu, 

Warranty,  . 

Reflections  and  Suggestions, 


PAOB. 

152 
181 
189 

17 
136 
185 
198 
124 

95 
132 

86 
167 
5 
105 
143 
149 
121 
203 


13 


ODEX  OF  BUSINESS  FORMS. 


•»•»- 


Agreement  for  Sale  of  Personal  Property, 

Acceptance  of  Draft, 

Acceptance  Supra  Protest, 

Agreement  to  Sell  Manufactory, 

Articles  of  Copartnership, 

Bank  Check, 

Bank  Draft, 

Bill  of  Lading, 

Bill  of  Exchange, 

Bill  of  Parcels, 

Bill  of  Sale, 

Bill  of  Sale  with  Warranty, 

Contract  of  Building, 

Contract  for  Land, 

Contract  with  Clerk  or  Workman, 

Contract  for  Sale  of  Fann, 

Certified  Check, 

Certificate  of  Deposit, 

Certificate  of  Bank  Stock, 

Conditional  Indorsement, 

Chattel  Mortgage, 

Chattel  Mortgage  Renewal, 

Chattel  Mortgage  Sale, 

Charter  Party,    . 

Contract  of  Hiring, 

Due  Bill  for  Money, 

Due  Bi  1  for  Goods, 

Draft, 

Draft,  Acceptance  Refused, 

Deposit  Ticket,   . 

15 


PAGE. 
35 

47 
52 
166 
178 
56 
72 
91 
92 
115 
116 
117 
32 
33 
34 
35 
57 
59 
60 
73 
118 
120 
120 
148 
184 
43 
43 
45 
49 
5^. 


16 


INDEX   OF   BUSINESS   FOBMS. 


I   I 


Foreign  Letter  of  Credit, 

Forms  of  Guaranty,    . 

Individual  Note, 

Individual  Negotiable  Note, 

Inland  Letter  of  Credit, 

Indorsement  in  Blank, 

Indorsement  in  Full, 

Indorsement,  General, 

Indorsement,  Qualified, 

Indorsement,  Conditional, 

Indorsement,  Restrictive, 

Joint  Note, 

Joint  and  Several  Note, 

Note  Negotiable, 

Note  not  Negotiable, 

Notice  of  Protest, 

Negotiable  Draft, 

Negotiable  Note. 

Note  with  Indorsements, 

National  Currency,     . 

Power  of  Attorney  to  Transfer  Stock 

Protest  of  Note, 

Power  of  Attorney,    . 

Protest  for  Non-acceptance 

Receipt  in  Payment,   . 

Receipt  on  Account,   . 

Railroad  Receipt, 

Set  of  Foreign  Exchange,' 

Treasury  Note,    . 

Voting  by  Proxy  -appointment 


TAGS 

88 
125 
65 
69 
89 
70 
70 
71 
71 
78 
73 
65 
66 
42 
42 
61 
71 
79 
79 
86 
61 
80 
165 
49 
83 
84 
139 
62 
87 
61 


CONTRACTS. 


■*♦♦■ 


1.  Contract. — A  contract  is  a  deliberate  agreement  between 
competent  persons  upon  a  legal  consideration  to  do,  or  to  abstain 
from  doing,  a  particular  thing. 

2.  Primary  Elements. — The  primary  elements  of  a  con- 
tract are  :  1st,  the  agreement;  2d,  the  consideration;  3d,  the 
thing  or  things  to  be  done  or  omitted. 

3.  Secondary  Elements. — The  agreement  is  a  compound, 
and  is  divided  into  three  simple  elements  :  1st,  the  persons; 
2d,  the  legal  ability;  3d,  the  assent.  Every  contract,  therefore, 
contains  five  essential  elements,  as  follows: 


Primary  Elements. 

1st.  Agreement. 


Secondary  Elements. 

(  1st.  The  persons. 

}  2d.   The  legal  ability 

(  3d.   Their  assent. 


Contract.  < 


2d.  Consideration. 

3d.  The  thing  or  things 
to  be  done  or  omitted. 


4.  The  Persons. — There  must  be  two  or  more  persons  to 
every  contract. 

5.  Their  Ability. — It  is  not  only  essential  that  there  shall 
be  two  or  more  persons  to  every  contract,  but  it  is  also  necessary 
that  these  persons  shall  have  the  legal  ability  to  make  a  con- 
tract. Persons  are  natural  or  artificial.  Corporations  and  States 
are  artificial  persons.  Corporations  can  make  only  such  contracts 
as  they  are  empowered  to  by  their  charters.  States  can  make 
such  contracts  only  as  their  constitutions  warrant,  and  their 
agents  cannot  bind  them  beyond  their  authority.  Persons  who  are 
not  of  legal  age  cannot,  in  general,  make  contracts.     But  when 

U 


1^'  1 1 


<i! 


18 


COMMERCIAL   LAW   AND   BUSINESS   FORMS. 


Of  age  they  may,  in  certain  cases,  affir...  and  ratify  contracts 
made  in  infancy.  The  contract  of  marriage  may  be  entered 
into  under  age,  the  age  and  circumstances  being  matter  of  State 
regulation.    Idiots  and  insane  persons  cannot  make  contracts. 

^^  6.   Their  Assent.-The  mutual  assent  of  the  parties,  called 
the  union  of  minds,"  is  a  necessary  element  in  every  contract 
Legal  assent  requires  to  be  mutual,  without  restraint,  fraud  or 
mistase.    A  mere  offer,  without  assent,  is  not  a  contract;  there 
must  be  an  acceptance  of  the  otfer.     Assent  may  be  given  even 
by  a  nod,  or  the  shaking  of  hands,  or  the  blow  of  a  hammer  at 
an  auction,  or  in  case  of  a  deaf  and  dumb  person,  by  a  sign 
In^leed,  the  saying  that  "silence  gives  consent"  is  in  certain 
cases  applicable  to  the  law  of  contracts. 

7.   Proposition.- When  a  person  wishes  to  make  a  contract 
with  another,  the  first  step  is  to  make  a  proposition.     This  is  a 
mere  offer,  and  so  long  as  it  is  not  assented  to  it  is  not  binding 
upon  either  person,  and  may  be  withdrawn.     When  the  propose 
tion  18  verbal,  and  without  any  stipulation  as  to  time,  it  is  not 
bmding  unless  accepted  at  once.    Because  a  person  is  willing  that 
his  offer  shall  be  accepted  at  the  time  he  makes  it,  and  under 
the  circumstances  existing  at  that  time,  is   no   reason  that  he 
should  be  willing  at  another  time  and  under  other  circumstances. 
But  If  custom,  or  the  previous  dealings  of  the  parties,  imply  an 
intention  to  give  time,  an  acceptance  within  a  reasonable  time 
will  be  sufficient. 

A  proposition  to  pay  a  certain  sum  for  the  return  of  articles 
which  have  been  lost  or  stolen,  may  be  accepted  at  any  time  by 
the  return  of  the  articles  and  a  demand  for  the  reward,  provided 
the  offer  has  not  been  revoked.  But  such  an  offer  is  not  con- 
sidered as  binding  for  an  unlimited  time,  but  is  restricted  to 
what  would  be  considered  a  reasonable  time  under  the  circum- 
stances. 

8.  Option  or  Refusal.-To  give  a  person  the  option  or  re- 
fnsal  of  property  at  a  certain  price,  is  to  give  him  a  specified 
time  m  which  to  make  up  his  mind  whether  he  will  accept  the 
proposition  or  not.  In  such  ease,  in  order  to  make  the  offer 
bmdmg  he  must  accept  within  the  specified  time.     But  the  party 


ELJ£ME><TS    OF    CONTRACTS. 


19 


making  the  proposition,  or  giving  the  refusal,  has  the  right  to 
retract  his  olfer  any  time  previous  to  its  acceptance  and  sell  to 
another'  if  he  chooses,  and  this  he  may  do  within  the  time  for 
which  the  refusal  was  given.  The  reason  of  this  is,  that  the 
offer  is  gratuitous  and  there  is  therefore  no  consideration  to 
support  it. 

The  acceptance  of  the  person  having  the  option  within  the 
time,  and  before  the  withdrawal  of  the  offer,  must  either  be  ex- 
pressed or  implied  from  his  acts  or  words  in  order  to  make  it 
binding.  A.  offers,  by  letter,  to  sell  to  B.  one  thousand  bushels 
of  No.  2  corn,  at  sixty  cents  per  bushel,  and  B.  answers,  "I  will 
take  it."  This  is  assent.  But  if  B.  says:  "I  will  give  3  ou  sixty 
cents  per  bushel  for  No.  1  corn,"  it  will  not  be  assent,  but  a  new 
offer.  C.  writes  to  D.,  offering  to  buy  flour  of  him  at  six  dollars 
per  barrel.  D.  intends  to  accept,  but  does  not  answer;  there  is 
no  agreement. 

9.  Sales  on  Trial.— These  are  executory  agreements,  by 
which  the  person  is  to  have  a  certain  length  of  time  in  which  to 
examine  and  test  the  property  to  ascertain  whether  it  suits  him 
or  not,  with  the  privilege  of  returning  within,  or  at  the  expiration 
of,  that  time  if  it  is  not  satisfactory.  In  legal  effect  he  says  "  I 
will  keep  and  pay  for  it,  if  it  suits  me."  In  these  cases  it  is  held 
that  the  seller  has  no  power  to  withdraw  his  offer  during  the 
time  for  which  it  was  given.  The  buyer  has  the  ricrht  of  trial 
during  the  whole  time,  and  the  right  to  accept  at  any  time 
before  the  expiration  of  the  time  which  was  given. 

10.  Revocation  of  Option.— A  revocation  may  be  made 
any  time  before  acceptance.    This  may  be  done  by  formal  notice 
as  where  the  parties  communicate  by  letter,  or  verbally  wherj 
they  are  together,  as  at  an  auction.   A  proposition  is  also  revoked 
by  the  death  of  the  person  making  it  before  acceptance.     But 
notice  of  revocation  is  not  always  necessary.     A.  made  an  offer 
by  letter,  to  B.  to  sell  him  his  apple  crop,  at  a  named  price! 
giving  him  an  option  of  five  days.     B.  called  upon  A.  within  the 
five  days  and  accepted  the  offer.     A.  replied  that  he  had  been 
negotiating  with  C,  and  refused  to  sell  to  B.     The  offer' of  A 
to  sell  to  C.  was,  in  effect,  a  revocation  of  his  offer  to  B. 


20 


COMMKKCIAL    LAW    AND    BUSINESS    FURMS. 


1  > 


III 


ill 


11.  Propositions  by  Letter.— ^V]len  persons  are  distant 
from  each  otlier  it  is  customary  to  make  propositions  by  letter, 
and  when  so  made  the  offer  may  be  accepted  any  time  before 
notice  of  withdrawal  if  within  a  reasonable  time,  provided  the 
offer  is  not  limited.  The  person  making  the  offer  can  retract  if 
his  letter  withdrawing  the  offer  reaches  the  other  person  before 
he  has  mailed  a  letter  of  acceptance,  or  telegraphed  an  accept- 
ance. But,  if  a  letter  of  acceptance  is  dropped  in  the  Post-office, 
and  one  retracting  the  offer  is  immediately  after  received,  the 
contract  is  binding  between  the  parties.  So,  also,  where  mer- 
chandise is  ordered  by  letter,  if  the  order  is  filled  and  the  goods 
are  placed  in  the  hands  of  a  carrier  before  notice  of  retraction, 
the  contract  is  completed  and  binding  between  both  parties. 
And  if  the  person  of  whom  the  goods  were  ordered,  not  having 
them,  should  order  them  from  a  third  person,  the  first  person 
would  be  liable  to  him  for  any  responsibility  he  assumed  which 
was  incident  to  the  filling  of  the  order. 

12.  The  Acceptance.— It  is  not  only  necessary  that  there 
should  be  an  acceptance,  but  it  must  be  according  to  the  terms 
of  the  proposition;  any  other  would  be  more  of  the  nature  of  a 
nevv^  proposition  than  an  acceptance.  When  an  acceptance  id 
sent  by  letter  it  takes  effect  from  the  time  it  is  mailed  and  not 
from  the  time  it  is  receiveil.  An  acceptance  cannot  be  revoked, 
because  as  soon  as  the  pro]»osition  is  accepted,  if  then  open,  the 
agreement  is  completed  and  the  contract  is  then  binding.  Ac- 
ceptance of  a  proposition  ni  i y  be  e'ahev  express  or  implied. 

13.  Express  Assent.— When  the  proposition  is  accepted, 
either  verbally  or  in  writing,  in  a  formal  manner,  it  is  an  express 
assent,  and  is  binding  between  the  parties.  Express  assent  is 
not  affected  by  custom  or  usage  of  trade. 

14.  Implied  Assent.— The  law  does  not  require  express 
assent,  but  it  will  raise  an  implied  assent  when  justice  and  reason 
seem  to  demand  it.  And  custom  and  usage  will  have  much  to 
do  with  implied  assent,  as  where  they  indicate  intention  upon 
the  part  of  the  person  who  makes  the  offer  to  give  a  reasonable 
time  the  offer  may  be  accepted  within  a  reasonable  time.     So 


ELEMENTS    OF    CONTRACTS. 


21 


where  a  draft  is  drawn  upon  A.  payable  thirty  days  after  sight, 
and  A.  having  refused  acceptance,  it  is  accepted  for  the  honor  of 
the  drawer  by  B.,  there  is  an  implied  assent  on  the  part  of  the 
drawer  to  indemnify  B.,  if  he  has  to  pay  the  draft.  And  where 
a  judgment  is  secured  against  A.,  B.  and  C.  as  co-sureties,  and 
A.  is  made  to  pay  the  whole  sum,  he  can  recover  a  proportional 
share  from  B.  and  C,  upon  their  implied  promise  to  re-imburse 
for  their  shares. 

15.  Mistake  of  Law.— It  is  well  established,  both  at  law 
and  in  equity,  that  a  contract  made  under  a  mere  mistake  of 
law  is  not  thereby  vitiated.  Every  man  is  presumed  to  know 
the  law,  and  ignorance  of  it  is,  therefore,  in  general  no  excuse. 
This  principle,  however,  has  application  only  to  contracts  per- 
mitted by  law  and  untainted  by  fraud. 

1 6.  Refusal  of  tlie  Proposition.— Refusal  of  the  proposi- 
tion annuls  the  offer,  and  relieves  the  party  making  it  from  all 
liability  concerning  it,  and  places  both  parties  in  the  same  posi- 
tion as  they  were  before  the  proposition  was  made,  so  that  the 
party  to  whom  the  offer  was  made  cannot  afterwards  withdraw 
his  refusal,  and  then  make  an  acceptance.  Nor  has  any  other 
person  a  right  to  accept  an  offer  but  the  person  to  whom  it  is 
made.  An  offer  to  buy  certain  goods  of  A.,  at  a  given  price, 
is  not  binding  if  accepted  by  B. 

1 7.  The  Parties  Bound.— The  parties  bound  by  a  contract 
are  only  those  who  are  parties  to  it,  or  have  privity  of  interest  in 
it  sufficient  to  create  reciprocal  obligations,  relating  to  the  same 
transactions.  But  the  original  parties,  or  some  of  them,  may 
sometimes  be  substituted  by  others  who  take  their  places.  This 
is  done  by  the  assignment  of  a  contract;  or  by  indorsement^  in 
the  case  of  negotiable  paper. 

18.  Mistake  of  Fact.- When  a  contract  is  made  under  an 
injurious  mistake  of  fact  it  is  voidable.  Mr.  Justice  Story  says: 
"As  every  man  is  presumed  to  know  the  law,  and  to  act  upon 
the  rights  which  it  confers,  when  he  knows  the  facts,  it  is  a 
culpable  negligence  in  him  to  do  an  act,  or  make  a  contract,  and 
then  set  up  his  ignoran^^e  as  a  defense.     But  no  person  can  be 


no 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


1 
I 


*   ♦ 


|i 


presumed  to  be  acquainted  with  all  matters  of  fact,  nor  is  it 
possible  by  any  degree  of  diligence  to  acquire  that  knowledge, 
and,  therefore,  ignorance  of  facts  does  not  import  culpable 
nogligence."  A  palpable  and  plain  mistake  of  fact  entitles  the 
mistaken  person  to  avoid  the  contract.  As  where  the  indorser 
of  a  note  which  did  not  specify  any  place  of  payment,  received 
a  notice  of  protest  of  the  note,  and  paid  the  note,  supposing  he 
was  liable,  but  afterwards  found  that  the  note  was  presented  at 
maturity,  at  the  former  place  of  husuiess  of  the  maker  o?j/y, 
which  was  held  to  be  not  a  good  presentment,  and,  therefore,  he 
was  not  liable,  and  the  payment  was  made  under  a  mistake  of 
fact,  which  entitled  him  to  recover  back  the  amount  he  liad 
paid. 

19.  The  Consideration. — The  consideration  is  that  which 
induces  the  parties  to  bind  themselves  by  the  contract,  and  is 
either  a  benefit  to  the  promisor,  or  an  inconvenience  or  injury  to 
the  other  party.  Tt  may  be  either  valuable  or  c/ood  It  is  not 
necessary  that  it  should  always  be  expressed;  it  may  sometimes 
be  implied. 

20.  Taluable  Consideration. — A  valuable  consideration 

may  consist  of  money,  or  other  property  to  be  paid,  or  of  some- 
thing to  be  done,  or  of  some  injury  or  inconvenience  to  be 
endured.  A  promise  to  marry  is  a  valuable  consideration.  The 
parties  to  the  contract  may  use  their  own  discretion  in  regard  to 
the  adequacy  of  the  consideration. 

21.  Good  Consideration. — This  may  be  either  blood  re- 
lationship, or  natural  love  or  affection,  which  will  support  the 
contract  as  between  the  parties  when  executed,  but  will  not  be 
sufficient  to  support  an  action  to  enforce  an  executory  contract. 

22.  Sufficiency  of  Consideration. — The  sufficiency  of  the 

consideration  is  generally  found  in  its  b?ing  a  benefit  to  the 
promisor,  or  a  loss  or  detriment  to  the  promisee.  It  is  not  neces- 
sary that  the  promise  and  consideration  should  be  equivalent  in 
value.  If  the  consideration  has  a  legal  value  it  does  not  signify 
how  insignificant  it  may  seem  to  be.  It  is  not  absolutely  neces- 
sary that  the  promisor  should  receive  any  benefit  in  order  to 


ilfl= 


ELEMENTS     OF     CONTRACTS. 


23 


make  ii  a  sufficient  consideration  to  support  a  promise.  Anv 
person  may  make  himself  liable  by  endorsing  negotiable  paper, 
although  he  receives  no  benefit  himself.  So,  also,  in  the  case  of 
a  guarantor  ;  if  the  promise  is  made  at  the  time  the  debt  is  con- 
tracted he  will  be  liable  for  the  payment.  But  if  a  person 
promise  to  do  something  himself  for  which  he  is  not  to  receive 
any  consideration,  and  he  fail  to  dc  it,  there  is  no  cause  of 
action  against  him. 

23.  Forbearance.— Forbearance  may  be  a  sufficient  consid- 
eration to  support  a  promise.  As  where  one  agrees  to  wait  a 
certain  or  reasonable  length  of  time  before  commencing  a  suit 
for  the  collection  of  a  well-founded  claim,  it  is  sufficient  to 
support  a  promise  made  by  the  debtor.  So,  if  a  third  person 
agree  to  pay  the  debt  of  another,  if  the  creditor  will  give 
iiim  a  reasonable  amount  of  time,  it  is  a  sufficient  consideration 
to  support  the  promise.  When  forbearance  operates  as  a 
benefit  to  the  one  party,  or  an  injury  to  the  other,  it  is  sufficient 
to  support  a  promise. 

24.^  Mutual  Promises.— Mutual  promises  will  support  each 
other  if  they  are  made  simultaneously.  If  made  at  different 
times,  they  are  not  a  good  consideration  for  each  other.  The 
liability  arises  from  mutuality  of  obligation;  one  cannot  be 
bound  unless  the  other  is.  Reciprocal  promises,  as  of  marriage, 
are  binding,  for  the  reason  that  one  promise  forms  the  considera- 
tion for  the  other. 

25.  Moral  Obligation.— A  pre-existing  moral  obligation  is 
a  sufficient  consideration  to  support  an  express  promise.  As 
where  a  legal  debt  which  once  existed  has  become  outlawed  by 
the  statute  of  limitations,  an  express  promise  to  pay  it  will  restore 
the  liability  of  the  debtor.  So,  also,  the  promises  of  an  adult 
person  to  pay  debts  which  he  contracted  before  he  became  of 
age.  And  an  express  promise  made  by  the  drawer  or  indorser 
of  a  draft  to  pay,  although  he  be  not  liable,  for  want  of  notice, 
will  renew  his  liability. 

26.  Statute  of  Frauds.-The  English  Statute  of  Frauds, 
which  has  been  adopted  in  most  of  the  States,  enacts  that  :  -No 


24 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


!! 


jij 


II 


jf 


Hli 


action  shall  be  brought  whereby  to  charge  the  defemlaiit  upon 
any  special  promise  to  answer  for  the  debt,  default  or  miscar- 
riage of  another  person,  unless  the  agreement  upon  which  such 
action  shall  be  brought,  or  some  memorandum  or  note  thereof, 
shall  be  in  writing,  and  signed  by  the  party  to  be  charged  there- 
with, or  some  other  person  thereunto  by  him  lawfully  author- 
ized." This  is  held  not  to  apply  to  origimd  promises,  but  only 
to  collateral  engagements,  or  cases  where  a  debt  already  exists  on 
the  part  of  a  third  person.  As  in  the  case  of  a  note  already 
given  to  A.  by  B. ;  a  promise  from  C.  to  pay  must  be  in  writing, 
to  be  binding.  If  A.  tells  B.  to  deliver  goods  to  C,  saying:  "  I 
will  pay,  if  he  does  not,"  or  "I  will  see  you  are  paid,"  it  is  a 
mere  offer  of  suretyship  or  guaranty,  and  is  a  collateral  under- 
taking, which  comes  within  the  statute;  but  it  is  otherwise  if  he 
says:  "Charge  them  to  me,"  or  "I  will  pay."  The  latter  is  an 
original  promise,  and  need  not  be  in  writing.  No  consideration 
is  necessary,  so  far  as  the  person  who  guarantees  is  concerned, 
if  it  is  a  benefit  to  the  person  in  whose  favor  the  promise  is 
made.  This  statute  does  not  apply  in  cases  where  an  original 
promise  is  made  at  the  time  the  debt  is  created.  The  statute  of 
frauds  also  provides  that  no  sale  shall  be  binding  unless  the 
buyer  shall  first  accept  part  of  the  goods  so  sold,  and  actually 
receive  them;  or,  2d,  give  something  in  earnest,  to  bind  the 
bargain,  or  in  part  payment;  or,  3d,  that  some  note  or  memoran- 
dum, in  writing,  of  the  said  bargain,  be  made  and  signed  by  the 
parties,  or  their  agents.  The  writing  must  state  the  promise, 
and  also  the  consideration.  Where  goods  exist  in  the  condition 
in  which  they  are  to  be  delivered,  and  the  delivery  is  to  take 
place  in  liie  future,  a  sale  of  such  goods  comes  within  the 
statute. 

37.  Things  to  be  Done  or  Omitted.— The  thing  to  be 

done  must  be  legal,  that  is,  it  must  not  violate  either  the  common 
law  or  the  statute  law.  Contracts  may  be  void  on  account  of 
fraud,  or  on  account  of  immorality,  or  when  in  violation  of 
positive  law,  or  public  policy. 

38.  Yoid  on  Account  of  Fraud. — Fraud  has  been  defined 
to  be  "every  kind  of  artifice  employed  by  one  person  for  the 


ELEMENTS    OF    CONTRACTS. 


25 


I 


purpose  of  wilfully  deceiving  another  to  his  injury."  Every 
contract  which  is  tainted  by  fraud  is  vitiated  both  in  law  and  in 
equity.  And  all  such  contracts  are  voidable  by  the  person  whom 
it  was  intended  to  perpetrate  the  fraud  upon.  If  he  choose  to 
avoid  the  contract  he  must  do  so  at  once,  after  having  knowledge 
of  the  fraud;  for  if  he  goes  on  with  the  contract  after  having 
knowledge  of  the  fraud,  he  cannot  afterwards  avoid  it.  The 
party  who  perpetrates  the  fraud  cannot  avoid  the  contract  on 
that  ground. 

39.  Contracts  in  Restraint  of  Trade.— A  contract  in 

general  restraint  of  trade  is  void,  as  being  against  the  public 
good.  The  reason  is,  "  that  the  tendency  of  such  agreements 
would  be  to  promote  monopolies,  to  check  competition,  enter- 
prise and  industry,  and  to  deprive  the  public  of  beneficial 
services  and  labors."  It  would  also  tend  to  promote  pauperism. 
"A.  gave  a  bond,  by  which  he  bound  himself  never  afterwards,  in 
his  own  name,  or  in  the  name  of  another,  to  conduct,  carry  on, 
use,  or  employ,  the  art,  trade  or  occupation  of  an  iron-founder 
or  caster,  or  to  be  concerned,  interested,  or  employed,  directly 
or  indirectly,  in  any  manner,  whatsoever,  or  under  any  pretense, 
whatsoever,  in  the  business  of  founding  or  casting  in  iron."  It 
was  held  to  be  void,  as  being  against  public  policy.  But  an 
agreement  for  partial  restraint  of  trade  for  a  valuable  considera- 
tion, if  reasonable,  is  valid. 

30.  Contracts  Toid  for  Other  Causes.— Contracts  may 

be  rendered  void  for  being  in  opposition  to  public  policy,  or  for 
impeding  the  course  of  public  justice,  restraint  of  marriage,  or 
for  bringing  about  marriage,  or  for  being  contrary  to  the  insol- 
vent acts,  or  for  immorality. 

31.  Construction  of  Contracts.— Contracts  derive  their 
force  from  the  mutual  r.i^sent  of  the  parties  to  the  terms  of  the 
contract.  It  therefore  becomes  necessary  to  get  at  the  intention 
of  the  ]>arties  at  the  time  they  entered  into  the  agreement.  This 
is  done  by  a  fair  construction  of  the  language  used  in  the  con- 
t  raot.  A  liberal  construction  is  given  to  all  commercial  contracts, 
and  especially  to  negotiable  paper.     If  the  terms  of  a  contract 


26 


COMMERCIAL    LAW    ANH    HUSINKSS    FORMS. 


H 


!l 


a 


are  iinil.iguous,  the  law  will  supply  what  seems  to  be  necessary 
to  get  at  the  intention  of  the  parties.  Usage  or  custom,  when 
general,  and  not  in  violation  of  the  principles  of  law,  will  often 
aid  in  explaining  the  intention  of  the  parties  to  a  contract. 

3*2.  Defenses. — Any  violation  of  the  essential  requisites  of 
a  contract,  or  any  omission  of  a  necessary  element,  will  render 
the  contract  void,  and  is  a  defense  to  any  claim  that  may  be  set 
up.  There  are  also  other  defenses  besides  these  to  actions  upon 
a  contract.  These  defenses  are  generally  enumerated  as  follows: 
1st,  Performance;  2d,  Pai/tnent;  3d,  lieceipfs;  4th,  Accord  and 
Satisfaction;  5th,  Arbitrament  and  Aicard;  6th,  Pendency  of 
Another  Action;  7th,  Release;  8th,  Ihider;  9th,  Statute  of 
limitation;  10th,  Set-off;  11th,  Pecouprnent. 

33.  Perforiuaiice.— The  person  to  perform  is  he  who  is 
6ound  by  the  contract,  and  who  can  discharge  his  legal  liabilitv 
by  the  performance  of  some  act.  If,  for  instance,  a  party  is 
bound  to  pay  a  certain  sum  of  money,  it  is  not  sufficient  that  he 
is  ready  to  pay,  he  must  either  pay  or  tender  payment  to  the 
party  who  is  entitled  to  receive  it.  But  if  suit  be  commenced 
to  enforce  the  payment,  the  money  must  be  paid  into  court  to  be 
an  effectual  defense  on  the  plea  of  tender.  Whatever  the  legal 
obligation  may  be,  either  to  pay  a  certain  sum  of  money,  or  do  a 
l>articular  thing,  it  must  be  done  according  to  the  legal  construc- 
tion of  the  contract.  When  all  has  been  done  that  can  legally 
be  required  the  contract  is  discharged. 

34.  Manner  of  Performance. — Every  contract  is  to  be 
performed  accordmg  to  the  terms  of  the  agreement,  as  it  was 
understood  and  assented  to  at  the  time  it  was  made.  The 
understanding  of  the  agreement  by  the  parties,  and  their  assent 
thereto,  are  to  be  inferred  from  the  terms  of  the  contract,  and 
the  circumstances  under  which  the  agreement  was  consummat<Mh 
If  there  are  express  stipulations  in  a  contract  they  must  be 
strictly  performed,  and  whatever  a  party  agrees  to  do,  he  must 
do  with  proper  skill,  so  that  some  benefit  shall  arise  from  it. 

35.  Time  of  Performance.— Time  is  an  important  element 
in  the  performance  of  a  contract,  especially  when  delay   would 


iiji 


J)EFENSES    OF    C02sTKACTS. 


27 


cause  loss  or  injury.  If  the  time  is  definitely  fixed  in  the 
agreement,  and  one  of  the  parties  chooses  to  deviate  from  it,  it 
devolves  upon  him  to  prove  that  the  time  was  not  important; 
otherwise,  it  must  be  done  within  that  time.  When  the  word 
month  is  used  in  contracts  it  is  understood  to  mean  a  lunar 
month,  except  in  negotiable  paper  and  commercial  contracts, 
when  a  calendar  month  is  intended.  When  the  performance  of 
a  contract  is  specified  to  be  a  certain  length  of  time  after  date, 
the  day  upon  which  it  was  dated  is  to  be  excluded  in  computing 
the  time.  When  a  party  is  to  do  something  on  a  certain  day,  he 
has  the  whole  of  the  day  to  do  it  in,  and  no  action  can  be  brought 
against  him  until  the  whole  day  has  expired.  But  a  day  at  a 
bank  means  during  banking  hours. 

36.  Place  of  Performance.— When  a  particular  place  is 
mentioned  where  the  act  is  to  be  performed,  the  person  who  is 
under  legal  obligation  to  perform  must  either  be  there  himself 
or  have  an  agent  -there  to  perform.  If  the  promise  be  to  pay  a 
certain  sum  of  money  at  a  bank  he  must  have  a  sufficient  sum 
in  the  bank,  or  be  there  and  tender  the  sum,  before  the  expiration 
of  banking  hours.  If  no  place  is  mentioned  where  payment  is  to 
be  made,  then  the  rule  is,  that  the  debtor  must  seek  out  the 
creditor  to  make  it. 

37.  Xon-Performance.— If  the  thing  promised  is  impossi- 
ble of  performance,  or  illegal  in  its  character,  generally  the  party 
is  not  bound.  But  if  he  contract  to  do  something  which  is  im- 
possible for  him,  but  possible  for  others  to  do,  he  is  bound  to 
have  it  done.  If,  however,  he  take  upon  himself  a  legal  obliga- 
tion, and  the  performance  is  rendered  impossible  by  an  act  of 
God,  it  will  be  a  good  defense.  Where  one  party  violates  a 
contract  the  other  may  generally  rescind  it  if  it  be  an  entire 
contract. 

38.  Payment.— Payment  is  another  defense  that  may  be 
interposed  to  the  enforcement  of  a  contract. 

Payment  to  be  legal  must  be  made  to  the  person  to  whom  it  is 
rightfully  due,  or  to  his  attorney,  or  his  legally  appointed  agent, 
or   to   a  legally  appointed   trustee.     Payment  must   generally 


28 


COMMERCIAL    LAW    AM)    BUSINESS    FORMS. 


li 


H 


be  made  in  money,  and,  if  demanded,  in  such  money  as  is  lejal 
tender  in  relation  to  the  debt  which  it  is  to  pay.  If,  however, 
other  currency  or  property  is  accepted  as  payment  by  the  c?  e<ritor 
or  his  authorized  agent  it  will  discharge  the  debt.  Part  payment 
of  a  debt  in  money  with  an  agreement  by  the  creditor  that  it 
shall  cancel  the  whole  debt,  if  done  before  the  debt  is  due  so  as 
to  be  a  benefit  to  the  creditor,  is  binding,  but  if  made  after  the 
<lebt  is  due,  there  is  no  consideration  to  support  it,  and  it  will  not 
be  bindinjx. 

39.  Oiving  his  own  Negotiable  Security.— If  the  debtor 

give  his  own  note,  or  bill  of  exchange,  or  other  negotiable 
security,  it  only  operates  as  a  conditional  payment,  unless  the 
creditor  expressly,  or  impliedly,  agree  to  take  it  as  payment. 
But  the  creditor  who  receives  such  security  is  obliged  to  hold 
it  until  maturity,  unless  transferred,  and,  if  it  is  not  paid  when 
properly  jnesented,  must  see  that  it  is  properly  protested,  and 
notice  is  sent  to  the  proper  parties,  or  the  debtor  will  be  dis- 
charged. l>ut,  if  the  paper  is  taken  as  payment,  and  is  then 
dishonored,  the  original  debt  will  have  been  discharged. 

40.  Note  or  Bill  of  a  Tliird  Person.— If  the  creditor 

receive  the  note  or  bill  of  a  third  person  from  the  debtor  of  his 
own  choice,  there  being  no  necessity,  it  will  be  considered  as 
payment  of  the  debt,  and  he  can  have  no  recourse  against  the 
debtor  unless  he  required  him  to  indorse  the  paper,  and  then  his 
claim  would  be  against  him  as  indorser,  and  not  on  the  original 
debt.  But,  if  the  creditor  can  show  that  he  received  the  paper 
as  security  only,  and  it  afterwards  turns  out  to  be  worthless,  the 
debtor  must  bear  the  loss. 

41.  Receipts. — A  receipt  is  7iot  absolute  proof  of  payment. 
It  may  be  set  aside  on  the  ground  of  mistake  of  facts,  falsity, 
or  fraud,  and  is  open  to  rebuttal  by  parol  evidence.  In  this 
respect  an  exception  is  made  to  the  general  rule  that  written 
evidence  cannot  be  varied  by  ]>arol.  It  is  now  well  establislied 
that  such  evidence  is  here  admissible. 

1*2.  Accord  and  Satisfaction.— Accord  is  an  agreement 
that  the  payment  of  a  certain  sum,  or  the  doino-  of  a  certain  act 


/ 


DEFENSES    OF    CONTRACTS. 


I    by  one  party,  should  be  accepted  by  the  other  in  full  satisfaction 

I  of  his  claim  or  demand. 
J      But  accord  without  satisfaction  is  no   defense.     The  parties 
I   may  compare  their  accounts  and  agree  as  to  the  exact  amount 
/    due  from  one  to  the  other,  and  the  debtor  may  promise  to  pay  at 
I    a  certain  time,  but,  until  payment  is  actually  made,  it  will  not 

\operate  as  a  defense. 

43.  Arbitrament  and  Award. — This  is  commonly  called 
arbitration,  and  signifies  an  investigation  and  determination  of  a 
matter  in  controversy  by  persons  chosen  by  the  contending 
parties.  The  parties  may  submit  the  matters  in  dispute  to  arl>i- 
tration,  either  by  a  written  or  verbal  agreement.  Where  an 
award  has  been  made  that  a  certain  sum  of  money  shall  be  paid 
as  damages  at  some  specified  time  in  the  future,  it  can  be 
pleaded  as  a  defense  any  time  before  the  expiration  of  the  time 
agreed  upon  for  such  payment. 

44.  Pendency  of  another  Action.— If  a  suit  has  been  com- 
menced against  a  person  in  one  Court,  another  suit  cannot  be 
brought  against  him  by  the  same  person  for  the  same  cause  in 
tlie  same  or  another  Court  until  the  first  is  withdrawn.  So,  also, 
a  Judgment  is  a  good  defense  to  a  suit  brought  by  a  party  for  the 
same  cause,  even  if  the  two  actions  are  different  in  form. 

45.  Release. — A  release  is  a  relinquishment  of  some  right  or 
claim  by  some  person  in  favor  of  another.  No  particular  form  of 
words  is  necessary  to  constitute  a  release.  It  may  be  made  by  an 
express  agreement  between  the  parties,  or  it  may  result  from  the 
operation  of  law.  Verbal  contracts  may  be  released  by  parol. 
Written  contracts  require  a  written  release,  and  contracts  under 
seal  require  the  release  to  be  under  seal.  A  release  may  be  for 
a  part  of  a  debt  or  for  the  whole.  When  the  principal  of  a  debt 
is  released,  the  interest  will  generally  be  released  also,  unless 
there  be  a  separate  contract  for  the  interest.  A  release  given  by 
one  of  several  joint  creditors  will  discharge  the  debtor  from  all. 
So,  also,  a  release  given  to  one  of  several  joint  debtors  will  dis- 
charge all.  A  release  may  result  from  operation  of  law;  Ist,  by 
assuming   relations  between   the  parties   inconsistent  with   the 

^      relation  of  debtor  and  creditor  either  by  marriage,  oi  by  death, 


V  I 


11 


(I 


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COMMEKllAL    LAW    AND    BUSINESS    FORMS. 


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ill 


or  by  appointment  ;  2d,  by  taking  a  higher  security,  as  where  a 
note  is  given  in  phice  of  a  book  account.  This  is  a  merger ^  and 
the  book  account  is  said  to  be  merged  in  the  note  ;  3d,  a  mate- 
rial alteration  of  the  contract  by  one  party  without  the  consent 
of  the  other. 

46.  Tender. — A  tender  is  an  offer  of  a  sum  of  money  in 
satisfaction  of  a  debt  or  cLaim,  by  producing  the  exact  amount 
and  offering  to  pay  it  to  the  creditor  or  person  claiming  it. 

When  a  legal  tender  is  made  before  a  suit  is  commenced,  it 
operates  as  a  good  defense  against  the  costs  of  the  suit,  damages, 
and  interest  on  the  debt  after  the  tender  is  made,  but  is  not  a 
defense  as  to  the  debt.  But  to  have  this  effect,  the  tender  must 
be  pleaded  and  the  money  tendered  must  be  paid  into  Court. 
The  tender  may  be  made  by  the  debtor  or  by  his  agent,  either 
to  the  creditor  himself  or  to  his  authorized  agent.  The  tender 
must  be  of  the  whole  amount  and  not  of  a  part.  It  must  be 
absolute  and  not  coupled  with  any  conditions.  Tender  to  be 
legal  must  be  made  in  gold  or  silver,  or  in  United  States  Treasury 
Notes.  Bank  bills  are  not  a  legal  tender  if  the  creditor  object  to 
them  on  that  ground.  But  National  Bank  Currency  is  legal  tender 
for  some  purposes,  as  in  payment  of  all  ta^es  and  excises  and  all 
other  dues  to  the  United  States  except  duties  on  imjyorts^  and, 
also,  for  all  salaries  and  other  debts  and  demands  owing  by  the 
United  States  to  individuals,  corporations  and  associations  within 
the  United  States,  except  interest  on  the  />i/W/c  debt. 

47.  Statute  of  Limitations. — The  legislature  of  any 
State  has  the  right  to  change  the  comnjon  law,  and  within  the 
limits  of  the  constitution  of  the  Stale,  and  of  the  United 
States,  to  legislate  upon  any  matter  not  embraced  in  the  com- 
mon law.  The  laws  enacted  by  the  legislatures  of  the  States 
are  called  Statutes,  and,  inasmuch  as  they  are  made  by  different 
bodies,  they  frequently  differ  in  respect  to  the  same  subject  in 
different  States. 

The  statute  of  limitations  enacts  that,  after  the  lapse  of  a 
certain  period  of  time,  no  action  can  be  sustained  at  law  for  the 
enforcement  of  a  claim,  but  the  party  entitled  to  its  benefit  may 
waive  by  omitting  to  plead  it.     ^f  not  waive<l,  it  is  a  perfect 


lllf ' 


DEFENSES    OF    CONTRACTS. 


31 


defense  to  all  claims  wliich  are  not  prosecuted  within  this  lim- 
ited period  of  time.  This  period  of  time  differs  in  different 
States  on  claims  of  the  same  kind,  and  also  differs  in  the  same 
State  on  claims  of  different  kinds.  In  the  State  of  New-York 
the  period  is  six  years  in  all. actions  arising  out  of  contracts, 
express  or  implied.  The  statute  does  not  extinguish  the  debt, 
but  it  prevents  any  prosecution  of  the  claim  after  the  expiration 
of  the  time.  The  statute  begins  to  run  upon  a  debt  from  the 
moment  it  is  due,  and  there  is  a  complete  cause  of  action. 
Upon  a  note  or  a  bill  of  exchange  it  begins  to  run  from  the  last 
day  of  grace.  On  a  note  payable  on  demand  it  begins  on  the 
day  of  its  date.  Where  a  promise  is  conditional,  it  begins  to 
run  from  the  happening  of  the  condition.  It  begins  to  run,  on 
a  contract  to  do  something  in  the  future,  from  the  time  of  its 
breach^ 

As  soon  as  the  statute  commences  to  run,  it  continues  until  an 
action  is  commenced,  or  the  time  expires  which  prevents  the 
action. 

But,  if,  when  the  debt  falls  due,  the  debtor  is  absent  from  the 
State,  it  does  not  commence  to  run  until  he  returns.  In  the 
State  of  New- York,  if  the  debtor  moves  out  of  the  State  during 
the  time  the  statute  is  running,  the  time  of  his  absence  is  not 
counted;  but,  if  he  return,  it  begins  where  it  left  off,  when  he 
moved  from  the  State.  So  successive  absences  of  the  debtor 
may  be  deducted  from  the  statute  limitation. 

After  the  statute  has  run  its  full  time,  and  the  legal  remedy 
has  been  lost,  still  the  moral  obligation  exists,  and  an  express 
promise  to  pay  will  renew  the  liability  without  a  new  consid- 
eration. So,  also,  a  part  payment  of  the  debt,  if  voluntarily 
made  by  the  debtor,  will  renew  the  legal  obligation  to  pay  the 
balance.  A  payment  on  account  of  interest,  on  an  outlawed 
debt,  will  have  the  same  effect.  In  the  State  of  New- York  it  is 
held  that,  if  a  payment  is  made  on  a  note  by  one  of  its  joi^it 
and  several  makers,  before  the  expiration  of  the  statute,  it  will 
not  prevent  the  statute  being  set  up  as  a  defense  on  the  part  of 
the  other.  When  a  payment  is  made  on  a  debt,  the  statute 
commences  to  run  again  from  the  time  of  the  payment,  the  same 
as  if  it  were  a  new  contract. 


'y*j 


I! 


32 


ii 


\i 


COMMKR(  lAL    LAW    AM)    lUslNKSS    FoKMS. 


!l 


it 


\l 


48,  S(»t-Oif. — A  set-off  is  a  cross  claim  upon  wiiicli  a  sep- 
arate action  might  be  brought  in  favor  of  the  defendant 
against  tlie  plaintiff.  This  defense  is  created  by  statute;  it 
does  not  exist  at  common  law.  A  debt  cannot  be  used  as  a  set- 
off, unless  it  is  actually  due  at  the  time  it  is  so  used.  A  debt 
need  not  be  of  the  same  nature  an«i  degree  in  order  to  be  so 
used,  but  they  must  be  mutual  and  due  in  the  same  right.  A 
debt  due  to  a  partnership  cannot  be  set  off  by  a  private  debt  of 
one  of  the  partners.  Nor  can  a  person,  who  is  sued  as  an 
a<lniinistrator,  use  a  debt  due  to  himself  as  a  set-off. 

49.  Recoupment.— This  term  was  introduced  by  the 
New- York  code  of  procedure.  It  includes  set-off,  and,  also,  a 
right  of  recovery  against  the  plaintiff  in  the  same  action,  of 
damages  for  breach  by  him  of  the  agreement  sued  on,  or  grow- 
ing out  of  the  transaction  on  which  the  action  is  founded.  A 
note  was  given  for  the  purchase  of  timber  which  was  standing 
in  a  fallow,  and  the  seller  agreed  to  indemnify  the  purchaseT 
against  any  loss  that  might  happen  from  burning  the  fallow. 
The  fallow  was  burned,  and  the  timber  was  damaged.  Suit  was 
brought  by  the  seller  for  the  collection  of  the  note,  and  it  was 
held  that  the  maker  of  the  note  had  the  right  to  recoup. 


« # 


FOEMS  OF   CO^^TEACTS. 

Form  No.  1. 
50.    Contract  of  Building. 

Memorandum  of  agreement  made  this  day  of  one  thou- 
sand eight  hundred  and  between  A.  B.,  of  '  merchant,  of  the 
first  part,  and  X.  Y.,  builder,  of  the  second  part.  The  said 
party  of  the  second  part  covenants  and  agrees  to,  and,  with  the 
said  party  of  the  first  part,  to  make,  erect,  build,  and  finish  in 
good,  substantial,  and  workmanlike  manner,  on  the  lot  belong- 
ing to  the  party  of  the  first  part,  and  known  as  No.  in  streel, 
one  brick  house  agreeable  to  the  draft,  plan,  and  explanatioii 
I'oreto  annexed,  of  good  and  substantial  materials  {or  of  such 
:ils  as  the  party  of  the  first  part  rtiay  find  and  provide 


FOEMS    OF    CONTRACTS. 


33 


therefor),  by  the  day  of  next.  And  the  said  party  of  the 
first  part  covenants  and  agrees  to  pay  unto'  the  said  party  of  the 
second  part,  for  the  same,  the  sum  of  dollars,  lawful  money 
of  the  United  States,  as  follows:  the  sum  of  {here  state  terms  of 
payment). 

(If  the  owner  is  to  furnish  materials,  add:  and,  also,  that  he 
will  furnish  and  procure  the  necessary  materials  for  the  said 
work,  in  such  reasonable  quantities,  and  at  such  reasonable  time, 
or  times,  as  the  said  party  of  the  second  part  shall  or  may 
require) . 

And  for  the  true  and  faithful  performance  of  all  and  every  of 
the  covenants  and  agreements  above  mentioned,  the  parties  to 
these  presents  bind  themselves,  each  unto  the  other,  in  the  penal 
sum  of  dollars,  as  liquidated  damages  to  be  paid  by  the  fail- 
ing party. 

In  Witness  Whereof,  The  parties  to  these  presents  have 
hereunto  set  their  hands  (and  seals)  the  day  and  year  first  above 
written. 

Signed,  sealed,  and  delivered  ) 
in  presence  of  f 


(Signatures.) 


^ 

^ 


Form  No.  2. 
51.    Contract  for  Land. 

Articles  of  agreement,  made  the  day  of  in  the  year  one 
thousand  eight  hundred  and  between  of  the  first  part, 
and  of  the  second  part,  witnesseth,  that  the  said  party  of 
the  first  part  ha  agreed  to  sell  and  convey,  and  do  hereby 
agree  to  sell  and  convey  to  the  said  party  of  the  second  part,  and 
legal  representatives,  all  that  certain  piece  or  parcel  of  land. 

This  agreement  is  upon  the  express  condition,  viz. :  The  said 
party  of  the  second  part  shall  first  pay  to  the  said  party  of  the 
first  part,  or  legal  representatives,  the  full  sum  of  in 
manner  following,  that  is  to  say:  which  sum  or  sums,  at 

the  time,  and  in  the  proportion  before  stated,  with  the  lawful 
interest  on  all  sums  unpaid,  the  said  party  of 

the  second  part  covenant    well  and  truly  to  pay;  and  for  the 
payment  thereof  the  said  party  of  the  second  part  bind 
in  the  sum  of 


\\ 


:{4 


COMMERCIAL    LAW    AND    BUSINESS    FORMS* 


ii 


li 


1 


Provided  the  aforesaid  sum  shall  be  paid  with  the  interebi,  al 
the  times  and  manner  above  mentioned,  the  said  party  of  the 
first  part  covenant  that  will  convey  to  the  said  party  of  the 
second   part,  and  legal  representatives,  the  above  de- 

scribed premises,  by  a  good  and  sufficient  Deed  containing  a 
covenant  of  Warranty. 

"Nevertheless,  if  the  aforesaid  purchase  money  be  not  paid  as 
above  specified,  then  the  said  party  of  the  first  part  may  retain 
all  previous  payments  then  made,  and  repossess 
of  the  premises,  at  any  time  after  thirty  days  after  default. 
The  Deed  is  to  be  subject  to  all  taxes  imposed  or  assessed  upon 
the  premises  after  the  date  hereof,  which  said  taxes  the  said 
party  of  the  second  hereby  agree    to  pay. 

Ix  Testimony  Whereof,  The  said  parties  have  hereunto 
interchangeably  set  their  hands  and  seals,  the  day  and  yp'*v  first 
above  written. 

Signed,  sealed,  and  delivered 
in  presence  of 


} 


Form  No.  3. 

52.    Contract  with  a  Clerk  or  Workman. 

This  agreement,  made  this  day  of  18  between  A.  B., 
of  of  the  first  part,  and  C.  D.,  of  of  the  second 

part,  witnesseth :  That  the  said  A.  B.  agrees  faithfully  and  dili- 
gently to  serve  the  said  C.  D.,  as  clerk,  in  the  store  of  said  C. 
D.  (or  otherwise),  at  for  the  period  of  from  and 

after  the      day  of  next,  for  the  sum  of  dollars 

per  .     In  consideration  of  which  service,  so  to  be  performed, 

the  said  C.  D.  agrees  to  pay  the  said  A.  B.  the  sum  of  dollars 
per  month  (payable  as  follows:  on  the       day  of  and 

on  the  day  of  each  month  following,  during  said  term,  and 
at  the  expiration  thereof,  the  balance  of  such  sum  as  has  not 
then  been  already  paid). 

And  it  is  understood  and  agreed,  that  the  death  of  either  of 
them  occurring  prior  to  the  expiration  of  said  term  of  shall 
terminate  this  agreement. 

In  Witness  Wiip:reof,  etc. 


llli 


forms  op  contracts. 
Form  No.  4. 


35 


S3.   Agreement  for  Sale  of  Personal  Property. 

This  agreemfnt,  made  this       day  of         18      between  A  B 
of  ,  farmer,  and  P.  a,  of  ,  merchant,  witnesseth:    That 

the  said  A.  B.,  m  consideration  of  the  agreement  hereinafter  con- 
tamed,  to  be  performed  by  P.  S.,  agrees  to  sell  and  deliver  to  the 
said  P  b.,  at  his  storehouse  in  (here  specify/  the  goods,  and,  if  d"- 
s^red,  the  quality  and  quantity),  on  or  h&ioT^ihe  day  of  18  ' 
And  the  said  P.  S.,  in  consideration  thereof,  agrees  to  pay  to  the 
said  A.  B.,  the  sum  of         dollars  per        for  said  imme- 

diately upon  the  completion  of  the  delivery  thereof. 

In  Witness,  etc. 

Form  No.  5. 

34.    Contract  for  Sale  of  Farm  and  Mill. 

Articles  of   agreement  made  this      day  of        18    between 
D.  F.,  of  the  town  of  in  the  county  of  and  State 

ot  of  the  first  part,  and  O.  C,  of  the  town  aforesaid,  of 

the  second  part,  witnesseth:  That  the  said  party  of  the  first 
part  hereby  agrees  to  sell  to  the  said  party  of  the  second  part 
his  house,  farm,  and  premises,  whereon  he  now  lives,  situate  in 

fnir'"     .,,    .  containing  about  acres,  more  or  less, 

together  with  the  crops  growing  on  the  same;  all  the  lumber 
for  the  house,  all  the  tools  belonging  to  the  saw-mill,  together 
with  every  article  attached  to  the  freehold,  for  the  sum  of 
dol  ars,  which  the  said  party  of  the  second  part  agrees  to  pay, 
as  follows,  VIZ. :  dollars  upon  signing  this  agreemeni 

dollars  by  the      day  of  next;  dollars  on 

Clay  of  next,  and  giving  a  mortgage  on  the  farm  whereon 

he  now  lives  for  dollars,  in        equal  annual  payments,  with 

annual  interest  on  the  same;  at  which  time  the  said'party  of  the 
first  part  ,s  to  make  and  execute  to  the  said  party  of  the  second 
part,  a  good  and  sufficient  warranty  deed  for  the  premises  hereby 
old  upon  the  delivery  of  which  the  said  party  of  the  second  part 
iS  to  secure  the  remainder,  to  wit:  dollars  by  a  bond  and 

mortgage  for  the  payment  of  the  remaining  sum,  in  equai 

annual  installments,  at  which  time  the  said  party  of  the  second 
part  IS  to  have  full  possession  of  the  premises 
In  Witness,  etc. 


NEGOTIABLE  PAPER. 


!l 


II 

II 


i| 


55.  Negotiable  Paper. — This  term  embraces  promissory 
notes,  due  bills,  drafts,  checks,  certificates  of  deposit,  bills  of  ex- 
change, bank  bills,  treasury  notes,  otherwise  called  greenbacks, 
and  other  similar  paper  payable  to  order,  or  to  bearer.  The 
promissory  note  is  a  mere  evidence  of  debt,  coupled  with  a 
promise  to  pay  it.  Bills  of  exchange  and  the  other  instruments 
above-named  are  used  for  the  transfer  of  money.  The, use  of 
negotiable  paper  as  the  representative,  and  in  lieu  of  money,  is 
enormous,  and  no  one  is  fit  for  a  commercial  or  business  employ- 
ment of  any  magnitude,  who  is  not  familiar  with  its  various 
kinds,  with  their  application  and  uses,  and  with  the  principles  of 
law  relating  to  them. 

56.  Its  Origin. — The  needs  of  commerce  gave  rise  to  the 
different  forms  of  negotiable  paper. 

Mere  barter  or  exchange  of  articles  of  property  and  services 
probably  preceded  the  use  of  money  as  the  representative  of 
value;  but  when,  by  extension  and  by  the  common  recognition 
of  money,  traffic  had  become  regular  between  distant  tribes  and 
nations,  it  assumed  the  dignity  of  commerce  and  required  for  its 
facilitation  credit  and  the  transfer  of  credit  and  money  by  pa- 
per. It  may  be  that  in  some  form  or  forms  negotiable  paper 
was  in  use  by  the  merchant  of  the  caravan,  who,  on  its  way  to 
Egypt,  bought  Joseph  of  his  brethren.  But  it  is  supposed  by 
some  writers  that  the  bill  of  exchange  first  came  prominently 
into  use  in  about  the  middle  of  the  fourteenth  century,  and  that 
the  promissory  note  was  of  a  later  origin. 

57.  Negotiability.— The  peculiarity  of  negotiable  paper  is, 
that  the  title  to  it  can  be  transferred  from  one  person  to  an- 
other by   indorsement  and  delivery,  or  sometimes  by  delivery 

36 


NEGOTIABLE    PAPER. 


37 


alone.     This  can  only  be  done  when  words  are  used  which  make  it 
negotiable.     The  words  which  are  commonly  used  are  "  order  "  or 
"bearer."     That  is,  it  is  made  payable  to  some  person's  order,  or 
to  him  or  his  order  (as  "pay  to  the  order  of  Wm.  Dunn,"  or, 
"pay  Wm.  Dunn  or  order"),  or,  in  the   latter  case,  using  the 
Word  "  bearer  "  in  place  of  "  order,"  or  simply  making  it  payable 
to  "bearer."      If  made  payable  to  Wm.  Dunn,  omitting  order 
and  hearer,  it  is  not  negotiable,  and  can  only  be  collected  by 
Bunn  or  his  agent.     The  statute  law  of  some  States  requires 
that  certain  other  words  shall   be  used  in  promissory  notes  in 
order  to  make   them   negotiable  within  such  States.      In  New 
Jersey  a  note  must  contain  the  words  "  without  defalcation  or 
discount."     In  Missouri,  "negotiable  and  payable  without  defal- 
cation or  discount,"  must  be  inserted.     In  Virginia  a  provision 
was  enacted  in  1873  which  provided  that  only  such  notes  shall 
be  negotiable  within  that  State  as  "  are  payable  in  the  State  at  a 
particular  bank,  or  at  a  particular  office  thereof,  for  discount  and 
deposit,  or  at  the  place  of  business  of  a  savings  bank  or  savings 
institution."     Other  states  have  different  statutory  requirements 
which,  of  course,  must  be  conformed  to  in  the  particular  States. 

58.  Promise  to  Pay.  — An  acknow^ledgment  of  a  debt 
alone  does  not  constitute  negotiable  paper;  there  must  be  a 
promise  to  pay,  or  an  order  upon  some  other  person  to  pay  a 
certain  sum  of  money.  But  as  no  particular  form  of  words  is 
necessary,  it  has  been  held  sufficient  where  a  person  promises  to 
be  responsible,  or  accountable,  for  a  certain  sum.  The  promise 
must  be  for  money  alone,  and  not  to  pay  in  goods.  The  amount 
must  also  be  definite,  and  not  be  left  uncertain. 

There  must  be  no  contingencies  or  conditions  about  the  pay- 
ment so  as  to  make  it  doubtful.  A  promise  to  pay  a  certain  sum 
upon  the  arrival  of  a  steamer  at  Buffalo,  which  is  to  sail  from 
Chicago,  is  not  negotiable  paper.  But  a  promise  to  pay  a  cer- 
tain number  of  days  after  the  death  of  a  certain  person  is  nego- 
tiable. 


I 


1^  \  '^ 


5- 


59.  Promissory  Notes.- A  negotiable  promissory  note  is 
a  written  agreement,  or  promise,  made  by  one  person  to  pay  to 
another  person  named  therein,  or  order,  or  to  the  bearer,  uncon- 


t 


38 


COMMERCIAL    LAW    AND    BUSINESS    FOKMS. 


ditioiially,  a  certain  sum  of  money,  at  some  specified  time.  The 
value  and  importance  of  a  promissory  note  as  a  circulating  credit 
in  the  commercial  world  depends  chietiy  upon  its  being  negotia- 
ble. Notes  are  generally  made  negotiable  by  being  made  paya- 
ble to  the  order  of  some  person,  as  James  Smith  or  order,  or  to 
the  maker  himself  or  order,  or  James  Smith  or  bearer,  or  by 
being  made  payable  to  hearer  simply,  Avithout  naming  any  person. 
In  the  two  latter  cases,  they  are  payable  to  the  holder.  Notes 
should  be  written  with  ink,  but  if  written  with  pencil  they  are 
held  to  be  good  at  law. 

60.  Responsibility  of  Maker— The  responsibility  of  the 
maker  of  a  note  — or  the  acceptor  of  a  draft  — begms  with 
the  person  to  whom  it  is  made  payable,  who  is  the  original 
holder,  and  extends  to  all  the  mbsequent  parties  to  whom  it  may 
be  transferred  by  indorsement  and  delivery.  His  liability  is 
sometimes  greater  to  one  holder  than  it  might  have  been  to 
another,  for  the  reason  that  if  a  note  is  transferred  for  value 
before  maturity,  it  cuts  off  cross  claims  and  other  defenses  which 
might  have  been  set  up  if  it  had  remained  in  the  hands  of  the 
original  party. 

61.  A  Subsequent  Party— The  law  gives  to  the  sub- 
sequent  parties  certain  rights  which  it  does  not  confer  upon  the 
original  party.  The  note  in  the  hands  of  the  payee  is  but  a 
simple  contract,  subject  to  all  the  circumstances  under  which  it 
was  given,  which  were  known  to  the  parties.  There  may  be 
some'' good  reason  why  the  note  could  not  be  collected  if  it 
remained  in  the  hands  of  the  payee  until  maturity.  But,  if  it 
is  transferred  before  maturity,  the  person  receiving  it  is  not  sup- 
jK)sed  to  know  that  any  such  reason  exists,  and  has  a  right  to 
presume  that  it  is  in  all  respects  good,  and  the  law  will  protect 
him.  And  any  other  person  receiving  it  from  him  will  hold  it 
free  from  all  defects,  and  the  law  will  enforce  its  payment. 
The  transfer  cuts  off  the  defects  of  the  note. 

6^.  In  GfOOd  Faith.— The  subsequent  party  who  receives 
negotiable  paper  from  the  original  payee  will  not,  however, 
hold  it  free   from   defects,  if   he  knows,  or  has  reason  to  be- 


NEGOTIABLE    PAPER. 


39 


lieve,  that  the   title  was   not  good  in  the  hands  of  the  party 
from  whom  he  receives  it.     He  must  receive  it  in  good  faith, 
in  order  to  be  entitled  to  the  advantages  conferred  by  its  nego- 
tiability.    That  is,  he  must  take  it  without  any  knowledge  or 
suspicion  of    any  wrong,  otherwise  his  title  will  be  no  better 
than    that  of   the   person   from  whom   it   came.      This  is  the 
general  rule,  but  "accommodation  paper"  does  not  come  under 
this  rule ;   it  may  be  bought  with  the  knowledge  of  its  being 
such,  and  yet  the  title  will  be  good.     It  must  be  remembered, 
also,  that  the  transfer  of  negotiable  paper,  even  before  maturity,' 
will  not  remedy  aU  defects.     If,  for  instance,  the  maker's  name 
is   forged,  or  if  it  is  signed   by  a  person  who  is   not   legally 
competent,  as  a  married  woman,  or   an    infant,  the    transfer 
will  not  make  it  good.     The  defects  which   are  overcome  by 
the  transfer  do  not  appear  in  the  paper  itself,  but  are  circum- 
stances connected  with  it  which,  if  known,  would  vitiate  the 
title. 

63.  Transfer  after  Maturity.— Negotiable  paper  may 
be,  and  sometimes  is,  transferred  after  maturity,  but,  when  so 
transferred,  it  does  not  carry  with  it  the  peculiar  qualities  which 
make  it  so  valuable  if  transferred  before  due.  If  it  remains 
in  the  hands  of  the  original  payee  until  it  falls  due,  it  is  then 
deprived  of  those  advantageous  qualities  which  it  possessed 
before  maturity.  Immediately  upon  becoming  due,  if  it  remain 
in  the  hands  of  the  original  payee,  it  becomes  fixed  as  a 
simple  contract  debt,  subject  to  all  the  equities  of  an  ordinary 
debt,  and  it  cannot  be  divested  of  these  defects  by  being  trans- 
ferred to  another  person. 

64.  Manner  of  Transferring.— Generally  speaking,  there 
are  two  ways  of  transferring  negotiable  paper.  Mrst,  if  it  is 
payable  to  some  persons,  or  order  — as  it  generally  should  be 
—It  cannot  be  transferred  without  the  person  to  whom  it  is 
payable  writing  his  name  across  the  back  of  the  note,  or  draft, 
and  then  delivering  it  to  the  person  who  is  to  receive  itj 
second,  if  it  is  payable  to  some  person  or  bearer,  or,  if  it  is 
payable  simply  to  bearer,  it  can  be  transferred  by  delivery 
alone.     But,  if  the  payee  choose,  he  may  write  his  name  on  the 


40 


COMMERCIAL   LAW    AND    BUSINESS    FORMS. 


ii 


it 


ill' 


back  when  it  is  payable  to  bearer.     The  effect  of  this  will  be 
explained  under  indorsement. 

05.  Date.— The  date  is  an  important  part  of  negotiable 
paper,  especially  where  it  is  made  payable  a  certain  number  of 
days  or  months  after  date.  The  day  upon  which  a  note  or  draft 
is  made  is  not  counted  in  computing  the  time  ;  but  it  is  the 
period  from  which  the  time  is  counted  to  find  the  day  upon 
which  it  becomes  due  and  is  payable.  If  the  date  is  omitted,  it 
does  not  destroy  the  note  or  draft,  but  it  then  devolves  upon  the 
holder  to  prove  as  nearly  as  possible  at  what  time  the  contract 
was  made.     The  date  means  the  day,  the  month,  and  the  year. 

66.  Time.— The  promise  of  payment  must  be  definite  as 
to  time.  It  must  be  at  some  fixed  period,  or  at  the  happening 
of  some  event,  which  is  inevitable.  It  may  be  payable  at  sight, 
or  a  certain  number  of  days  after  sight,  or  on  demand,  or  at  any 
other  time  where  the  period  is  fixed  by  usage  or  law.  If  a  note 
does  not  specify  any  time  or  day  of  payment,  the  law  deems  it 
payable  on  demand,  and,  where  it  is  payable  on  demand,  it  is 
not  necessary  that  a  formal  demand  be  made;  it  is  sufficient  to 
bring  a  suit  for  collection. 

67.  Person.— There  should  be  no  uncertainty  as  to  the 
person  to  whom  payment  is  to  be  made  in  a  note.  His  name 
should  appear  in  the  note.  It  is  also  essential  that  the  name  of  the 
person  who  is  to  pay  the  note  should  be  signed  to  it.  The  sig- 
nature may  be  made  by  himself,  or  by  any  person  who  is 
authorized  by  him  to  sign  his  name  for  him.  The  person  who 
makes  the  promise  to  pay  must  be  competent  to  make  such  a 
contract.  A  person  may  be  naturally  or  legaUy  incompetent. 
Idiots  and  lunatics  are  naturally  incompetent.  Aliens  and 
infants— persons  not  of  legal  age— and  married  women  in  some 
States  are  legally  incompetent.  In  a  few  of  the  States  legis- 
lation has  given  married  women  the  right  to  carry  on  business 
in  their  own  names.  An  unmarried  woman  is  legally  as  compe- 
tent to  make  contracts  as  a  man. 

68.    The  Amonnt.— The  amount  which  is  promised  to  be 
paid  should  be  definitely  specified,  and  is  generally  expressed, 


negotia:ble  paper. 


41 


both  in  words  and  figures.  The  words  expressing  the  amount 
appear  in  the  body  of  the  note,  and  the  figures  at  the  upper  or 
lower  left  hand  corner.  If  there  is  any  discrepancy  between 
the  amount  expressed  in  the  words  and  the  figures,  the  law 
assumes  that  the  words  express  the  correct  amount,  for  the 
reason  that  a  person  would  be  less  likely  to  make  a  mistake  in 
writing  the  words  than  in  putting  down  the  figures.  But 
in  a  case  reported  in  Michigan,  where  there  was  a  dispute  as  to 
whether  the  word  expressing  the  amount  -^2^^ fifty  or  sixty  dol- 
lars, it  was  ?ield  that,  where  the  words  are  obscurely  written, 
and  are  uncertain  and  ambiguous,  it  is  for  a  jury  to  decide  what 
the  words  are,  after  hearing  the  evidence  of  the  circumstances 
connected  with  the  giving  of  the  note. 

69.  Consideration. — No  contract  is  good  unless  there  is 
a  consideration.  A  promissory  note  is  a  simple  contract ;  there- 
fore, it  is  void  without  consideration.  But  this  is  only  true  as 
between  the  original  parties  to  the  note.  If  a  negotiable  note 
was  originally  given  without  any  consideration,  and  afterwards 
comes  into  the  hands  of  an  innocent  holder  before  maturity,  for 
a  valuable  consideration,  the  holder's  title  will  be  good,  and  he 
can  recover;  although  the  party  to  whom  it  was  first  given  could 
not  enforce  the  collection  of  it  if  it  remained  in  his  hands  until 
maturity.  This  doctrine  is  considered  indispensable  to  the  secu- 
rity and  circulation  of  negotiable  paper.  So,  also,  if  a  note  or 
draft,  which  had  been  lost  or  stolen,  and  was  indorsed  in  blank, 
or  payable  to  bearer,  come  into  the  hands  of  a  person  through 
a  business  transaction  without  any  knowledge  or  suspicion  of 
any  wrong,  he  has  a  good  title  to  it.  But  if  he  receive  it  with- 
out giving  any  money  or  other  value  for  it,  his  title  is  no  better 
than  that  of  the  person  from  whom  it  was  received. 

70.  Form. — No  particular  form  is  necessary  in  writing  a 
promissory  note,  but  it  must  conform  to  the  foregoing  require- 
ments so  far  as  to  constitute  a  promise  to  pay  a  certain  sum  of 
money  at  all  events,  and  must  not  interfere  with  any  statute  reg- 
ulation. The  mere  acknowledgment  of  a  debt  without  any 
promise  to  pay  is  not  a  promissory  note.  Neither  is  a  promise 
to  pay  a  certain  sum  in  merchandise  a  promissory  note.  But  where 
a  note  was  written  "Borrowed  of  I.  S.  loO,  which  I  promise  not 


ii    ?!i 


Ill 


42 


COIIMERCIAL   LAAV    AND    BUSINESS    FORMS. 


Wj    1 

'I 


1' 


ii 
jii 


ii>i 


to  pay,"  it  was  held  that  the  word  not  should  be  rejected,  and 

71,    Form  No.  6.  (Negotiable.) 


that  the  note  was  good. 


^0^^  $2fi00'\  Buffalo,  X.   Y,,   Su^e  -/,    18S2. 

^&€^M^  </€i-ud afler  date  CJ  proinise  to  pay 

g.    <=^.    o)-tixi>of^t  or    order 

^*^  Vi^<2   0'/i<xud,<i<n</_  DOLLARS 


-■.♦■-  >.„,■* 


»   Value  received. 
f  No.  33. 


^  <^.  j^uMu^. 


72.   Form  No.  7.        (Not  negotiable.) 

$1,000'\                       Buffalo,  X.   i:,  ^^u^^   ^^4  1882. 
(yA^te€.  ^yyui^n^^ after   date  Cj  promise  to  pay 

#'C  ^  J^Z..^^ : 

^<^  S4it^ud€i^€/. DOLLARS 

at  Bank  of  Buffalo.      Value  received. 

^o.  48.  (^,  J2/.  OOu^i/. 


The  two  notes  here  given  illustrate  common  forms  of  promis- 
sory notes.  No.  6  is  made  payable  to  C.  L.  Brown,  or  order, 
and  is  therefore  negotiable.  No.  7  is  payable  to  W.  H.  Glenny, 
and  is  without  the  word  order  or  bearer,  and  therefore  is  not 
negotiable,  and  can  only  be  collected   by  Mr.  Glenny  or  his 


agent. 


73.  The  Payee. — The  payee  is  the  person  to  whom  the 
note  is  made  pavable.  In  the  first  note,  C.  L.  Brown  is  the 
payee.  In  the  second,  W.  II.  Glenny  is  the  payee.  The  payee 
or  any  other  owner  of  a  note  is  also  called  the  holder.  The 
name  of  a  payee  is  not  always  expressed  in  the  face  of  the  note, 
and  when  not  expressed,  and  the  note  is  payable  to  hearer  simply, 
then  any  person  who  is  the  rightful  holder  is  the  payee. 


NEGOTIABLE   PAPER. 


43 


74.  The  Maker. — The  maker  of  a  note  is  the  person  who 
signs  it,  and  becomes  responsible  for  the  payment.  The  maker 
of  the  first  note  is  S.  S.  Guthrie,  and  S.  G.  Burt  is  the  maker  of 
the  second.  The  maker  binds  himsdf  to  pay  the  amount  specified 
in  the  note  to  the  person  who  is  entitled  to  receive  it  on  the  day 
pf  maturity.  He  is  under  no  obligation  to  pay  it  before  maturity; 
but  if  he  should  pay  it  before  it  became  due,  and  omit  to  take  it 
up,  any  person  who  should  take  it  for  value  before  maturity,  not 
knowing  it  had  been  paid,  could  hold  the  maker  responsible  for 
its  payment.  And  if  the  previous  holder  had  given  the  maker  a 
receipt  acknowledging  the  payment  before  maturity,  it  would 
not  invalidate  the  claim  of  the  subsequent  holder. 

75.  A  Due  Bill. — A  due  bill  is  a  written  acknowledgment 
and  evidence  of  a  debt.  It  may  be  payable  in  money  or  in  goods, 
or  in  any  kind  of  personal  property.  It  may  be  payable  at  sight, 
or  on  demand,  or  at  a  specified  time  in  the  future.  When  payable 
in  money  it  is  much  of  the  nature  of  a  note.  It  is  one  of  the 
simplest  forms  of  negotiable  paper.  The  following  are  common 
forms: 

76.   Form  No.  8.  (For  money.) 


SI 


$40(/'\                               Xew-Yor'k,Sc^A^  -/d^  1882. 
Due  t^e^yi^^  ^t^-T^c.-a^yi^  or  order,  for  value  received, 
)i4/>^</te€t... ^.DOLLARS 


CLU4. 


Xo.  17. 


0. 


''^€lei  ^€z^^i^^. 


77.   Form  No.  9. 


(For  goods.) 


*^'    $5(r\  Albany,  N.  Y.,/uA,  /,   1882. 

Si't^  ^hA'h  J^.  ^<i.uaA^</.  for  value  received, 


V  \^ 


w 


^T^T ~D  OLLARS 

imyable  in  goods  from  my  store,  on  demand. 


931 


I 

.1^1 


'S-.U 


11 


44 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


i! 


I 


II 


lit 


78.  A  Draft. — A  draft  is  a  written  order,  or  open  letter 
of  request,  written  by  one  person,  and  directed  to  another,  re- 
questing him  to  pay  a  certain  sum  of  money  to  a  third  person, 
or  to  his  order,  or  to  the  bearer. 

79.  A  Bill  of  Exchange. — A  bill  of  exchange  is  the  same 
thing  as  a  draft,  and  is  only  another  name  for  it.  The  commercial 
meaning  of  the  one  is  just  the  same  as  the  other.  Drafts  or  bills 
of  exchange  are  of  two  kinds,  namely:  inland  and  foreign.  Fre- 
quently the  word  exchange  is  dropped,  and  they  are  simply  called 
inland  bills  and  foreign  bills. 

80.  All  Inland  Bill. — An  inland  bill  is  a  draft  which  is 
drawn  and  payable  in  the  same  country  or  State.  Any  draft 
which  is  to  be  paid  within  the  jurisdiction  of  the  laws  relating 
to  it  where  it  was  drawn,  is  an  inland  bill. 

81.  A  Foreign  Bill. — A  foreign  bill  is  one  drawn  in  one 
country  and  payable  in  another,  or  drawn  in  one  State  and  pay- 
able in  another.  These  are  called  foreign.,  because  the  laws 
relating  to  and  governing  negotiable  paper  are  not  the  same  in 
different  countries  nor  in  different  States.  Any  draft  or  bill  is 
considered  foreign  when  the  laws  governing  it  are  different  at 
the  place  of  payment  from  those  at  the  place  where  it  was 
drawn.  Remittances  can  generally  be  made  much  more  cheaply 
and  safely  by  drafts  than  by  sending  money.  If  a  draft  is  lost 
a  duplicate  can  be  obtained,  and  therefore  no  loss  will  be  sus- 
tained. When  remittances  are  made  to  foreign  countries  by 
draft,  it  is  customary  to  draw  two  or  three  for  the  same  amount, 
which  are  duplicates  of  each  other,  and  send  each  by  a  different 
ship,  so  that  one  will  be  sure  to  reach  its  destination. 

8^.  Form  of  Draft. — As  in  a  note  so,  also,  in  a  draft 
no  particular  form  of  words  is  necessary.  The  forms  have 
varied  at  different  periods.  The  form  of  a  draft  is  unlike  that 
of  a  note,  for  the  reason  that  the  draft  is  a  request  or  order 
upon  another  person  to  pay  ;  whereas,  a  note  is  a  direct  promise 
by  the  maker  to  pay.  The  following  will  illustrate  a  common 
f  orni . 


NEGOTIABLE   PAPEE. 


45 


83,  FoEM  No.  10. 


$500''\  New 'York,   QJ^m<i-y.   <f^    1882. 

O^    ^Ce^    <z4^    di^A/  pay    to    the    order    of 


- DOLLARS 

Value  received,  with  current  rate  of  exchange. 


To  ^-  <^  j0^<«^-% 
No.  133. 


i.{.i,i,-a. 


i,  c^.(f.\jr 


>^€l. 


^^^. 


84.  The  Parties. — The  parties  to  negotiable  paper  are  of 
two  kinds,  original  and  subsequent.  The  original  parties  to  a  note 
are  two  in  number,  viz. :  the  maker  and  the  payee.  The  original 
parties  to  a  draft  are  three  in  number,  viz.:  the  drawer,  the 
payee,  and  the  drawee.  In  the  foregoing  draft  John  R.  Penn  is 
the  drawer,  S.  S.  Rogers  is  the  payee,  and  J.  P.  Dudley  is  the 
drawee.  These  are  the  original  parties  to  the  draft.  Those  who 
receive  it  afterwards  by  indorsement  are  the  subsequent  parties. 

85.  The  Number.— The  number  of  a  note,  or  draft,  repre- 
sented in  the  foregoing  draft  by  "No."  in  the  lower  left  hand 
corner,  is  inserted  by  the  person  who  writes  it  up  ;  that  is,  the 
maker  of  the  note,  or  the  drawer  of  the  draft. 

Every  merchant  keeps  a  blank  note-book,  and  draft-book,  and, 
when  he  fills  up  a  note,  or  a  draft,  for  issue,  he  numbers  it,  and 
the  stub,  from  which  it  is  taken,  alike,  and  also  notes  on  the 
stub  the  substance  of  the  note,  or  draft,  as  the  case  may  be. 
The  numbers  of  the  notes  or  drafts  issued,  and  of  the  stubs  from 
which  they  were  taken,  are,  of  course,  consecutive,  and  corre- 
spond with  each  other. 

86.  Theory  of  Draft.— When  a  draft  is  drawn  the  suppo- 
sition is  that  the  drawee,  or  person  upon  whom  it  is  drawn,  has 
funds  in  his  hands  belonging  to  the  drawer,  or  is  indebted  to 
him,  and  will  accept  the  draft,  or  pay  it,  as  the  case  may  be. 


M     »i 


3 '; 


1     1 
H 


f! 


46 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


DI  I 


■iJ    I 


Sometimes,  however,  drafts  are  drawn  by  agreement  between 
the  drawer  and  drawee  where  there  is  no  indebtedness  on  the 
part  of  the  drawee. 

Drafts  are  sometimes  drawn  upon  the  supposition  that  the 
drawer  will  have  funds  in  the  hands  of  the  drawee  before  the 
draft  will  be  presented  to  him. 

87.  Liability  of  Parties.— A  person*  may  be  absolutely 
liable,  or  conditionally  liable,  on  negotiable  paper.  He  is  abso- 
lutely liable  when  he  delivers  to  the  payee  his  positive  promise 
to  pay  as  the  maker  of  a  note  or  the  acceptor  of  a  draft.  He 
is  conditionally  liable  when  he  gives  to  the  payee  his  order 
upon  some  one  else  to  pay,  or  endorses  a  promise  or  request  to 
pay.  The  maker  of  a  note  is  absolutely  liable,  the  drawer  of 
a  draft  is  only  conditionally  liable;  that  is,  he  is  liable,  provided 
the  person  drawn  upon — the  drawee — refuses  to  pay.  The 
drawee  is  not  liable  at  all  until  he  has  accepted  the  draft. 

88.  An  Acceptance.— When  a  draft  is  written  up  and 
put  into  the  hands  of  the  payee,  it  is  a  request  or  order  to  pay, 
directed  to  a  third  person.  If  it  is  payable  at  sight,  no  accept- 
ance is  necessary,  except  in  those  States  which  allow  davs  of 
grace  on  sight  drafts.  The  laws  of  the  different  States  are  not 
uniform  in  this  respect.  In  New-York  days  of  grace  are  not 
allowed  on  sight  drafts.  In  Massachusetts  they  are  allowed. 
But,  if  a  draft  is  made  payable  a  certain  number  of  days  after 
sight,  it  must  be  presented  by  the  holder,  or  his  agent,  to  the 
drawee  for  acceptance,  because  the  day  upon  which  it  is  accepted 
is  the  period  from  which  the  time  is  to  be  reckoned  instead 
of  the  date.  The  drawee  signifies  his  willingness  to  pay  the 
draft  at  maturity  by  writing  across  its /ace,  "accepted,"  with 
the  date  and  his  signature.  This  is  generally  written  w^ith  red 
ink,  probably  to  attract  attention  ;  but  the  legal  effect  is  the 
same  with  any  kind  of  ink.  This  writing  across  the  face  is 
called  "an  acceptaiice^''  and  is  an  absolute  promise  to  pay  at 
maturity  ;  and,  therefore,  the  draw^ee  is  absolutely  liable,  as 
soon  as  he  accepts  and  delivers  the  draft.  If  the  draft  is 
payable  a  certain  number  of  days  or  months  after  date,  it  will 
fall  due  without  acceptance,  and  it  is  not  obligatory  to  present 


NEGOTIABLE    TAPER. 


47 


it,  but,  as  there  is  no  principal  debtor  until  accepted,  it  is  better 
even  then  to  have  it  accepted.  If  the  drawee  wants  a  rea- 
sonable time  to  determine  whether  or  not  he  will  accept,  the 
bill  may  be  left  with  him  until  the  next  day,  and,  if  he  should 
refuse  to  deliver  the  bill  when  called  for,  he  can  be  held  as  an 
acceptor.  When  a  bill  is  drawn  on  tioo  persons  who  are  not 
partners  it  should  be  presented  for  acceptance  to  both.  An 
acceptance  in  a  legal  sense  is  a  promise  to  pay. 

89.  Form  of  Acceptance. — The  form  of  acceptance  de- 
pends upon  the  law  of  the  place  where  it  is  made.  No  particu- 
lar form  of  words  is  necessary,  but  it  must  import  acceptance, 
and  comply  with  any  statute  requirements  of  the  place.  The 
Statute  of  New-York  requires  that  the  acceptance  shall  be  in 
writing,  and  be  signed  by  the  acceptor  or  his  agent.  The  ac- 
ceptance may  be  absolute  or  conditional.  As  the  drawee  is  only 
liable  in  accordance  with  the  acceptance  which  he  makes,  it 
follows  that  the  bill  is  affected,  in  the  hands  of  any  person  w^ho 
may  hold  it,  by  the  conditions  of  the  acceptance.  Therefore,  if 
a  bill  of  exchange  is  accepted  on  condition  that  the  drawee 
receive  money  from  the  drawer  before  maturity  to  pay  it,  the 
holder  cannot  enforce  collection  without  first  proving  that  the 
money  was  received.  The  following  form  will  illustrate  the 
arrangement  and  wording  of  an  acceptance  which  in  business  is 
written  across  the  face  of  the  draft. 


90.   Form  No.  11. 


(Acceptance.) 


I 

iiHl 


$50(r.  \ 


>• 


-Ce^^  €t-a-^^  \  ^^^i*^^ 


New 'York,   C^'d^^   /.    18S2. 
^^^^^^        i>«y    to    the    order    of 

-7-— T^ 

^^^  fWV^^ - - D  OLLARS 

yalue^^ive^^^ith  current  rate  of  exchange. 

To  ^  ^'  ^^t^^-^^e^j 
No.  133. 


A^f.{/^''-'^-'^^'^"^- 


48 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


I 


If  i' 


hi 


m 


91.  Presentment  for  Acceptance.— When  the  payee 
receives  a  draft  payable  a  certain  number  of  days  after  sight,  it 
is  his  duty  to  present  it  for  acceptance  within  a  reasonable  time. 
It  must  be  presented  by  the  holder  or'his  agent.  It  is  to  be  pre- 
sented to  the  drawee  or  his  authorized  agent.  If  the  draft  is 
drawn  on  a  partnership  it  may  be  presented  to  any  one  of  the 
partners.  If  drawn  on  two  or  more  persons  who  are  not  part- 
ners, it  should  be  presented  for  acceptance  to  each  person.  A 
draft  may  be  presented  any  time  during  the  business  hours  of 
the  day,  but  no  presentment  can  be  made  on  a  Sunday  or  a  legal 
holiday.  The  place  for  presentment  is  at  the  residence  of  the 
drawee,  or  at  his  place  of  business,  generally  at  the  latter.  The 
holder  is  under  no  obligation  to  receive  a  conditional  acceptance, 
and  can  demand  an  unconditional  and  absolute  one,  according  to 
the  tenor  of  the  bill. 

93.  Non- Acceptance.— Non-acceptance  is  a  refusal  by  the 
drawee  to  accept  the  draft  when  presented,  and  the  draft  is  then 
called  dishonored.  Immediately  upon  the  dishonor  of  the  bill  it 
becomes  the  duty  of  the  holder,  if  it  is  a  foreign  bill,  to  have  it 
protested,  and  send  notice  of  the  protest  to  all  the  parties  who 
are  conditionally  liable.  This  protest  should  be  made  by  a 
notary  public,  and  he  should  present  the  bill  and  make  the  de- 
mand himself.  If,  however,  no  notary  public  can  be  found,  it 
may  be  presented  and  protested  by  any  respectable  citizen  in 
the  presence  of  witnesses.  It  is  customary  with  banks  and 
business  men  generally  to  have  all  paper  that  is  dishonored, 
either  by  non-acceptance  or  non-payment,  protested,  and  to 
notify  all  parties  whom  it  is  intended  to  hold  responsible  for  the 
payment  of  the  paper.  The  protest  must  be  made  out  on  the 
same  day  the  paper  is  dishonored,  and  the  notices  must  be  sent 
as  soon  as  the  day  following.  If  there  is  any  neglect  in  having* 
the  bill  protested,  or  in  sending  the  notices,  all  who  are  not 
properly  notified  w^ill  be  discharged,  and  the  holder  must  submit 
to  his  loss. 


i  IM 


93.  A  Protest. — A  protest  is  a  formal  declaration  made 
by  a  notary  public  against  any  loss  that  may  be  sustained  in 
consequence  of   the  non-acceptance  of  the  draft.     The  protest 


NEGOTIABLE    PAPER. 


49 


must  be  made  out  in  accordance  with  the  law  of  the  place  where 
it  is  done.  In  cities  and  villages  a  notary  public  is  generally 
employed  to  do  the  business.  Let  us  suppose  that  the  holder  of 
the  following  draft  (Form  No.  12)  presented  it  to  the  drawee  on 
the  third  day  of  June,  1882,  and  demanded  acceptance,  and 
that  acceptance  was  refused  by  the  drawee. 

94.   Form  No.  12. 


$1,000'\  Chicago,  III,  ^^^^    'f<i-4  1882. 

c/A-ci,^  days  after  sight  pay ^.  ^.   M^t^^yi^d.^  or  order, 

(^W  (yXiiud'a^c/.. DOLLARS 

and  charge  to  account  of 

To  ^.  M.  A^^,      )  ^  Si.  g£U^^.^. 


No.  6. 


This  draft  having  been  presented  to  C.  H.  Jones  for  accept- 
ance, and  he  having  refused  to  accept  it,  it  was  then  placed  in 
the  hands  of  Charles  E.  Austin,  a  notary  public,  who  demanded 
payment,  and  made  out  the  following  protest,  to  which  the  draft 
or  a  copy  of  it  should  be  annexed: 


95.   Form  No.  13. 


STATE  OF  NEW-YORK 
City  of  Buffalo. 


1 


ss. 


giC  it  ^tt0MJtt,  that  on  the  third  day  of  June,  in  the  year  of 
our  Lord  one  thousand  eight  hundred  and  eighty-two,  at  the  re- 
quest of  J.  C.  Barnes  of  Buffalo,  I^  Charles  E.  Austi?i,  a 
Notary  Public  duly  admitted  and  sworn,  dwelling  in  the  City  of 
Buffalo,  County  of  Erie,  and  State  aforesaid,  presented  the  an- 
nexed draft  of  E.  R.  Andrews  on  C.  H.  Jones 


^  for  one  thousand. Dollars, 

at  the  office  of  C  H.  Jones,  No.  1000  Main  Street,  to  himself,  a?id 
demanded  acceptance  thereof  which  was  refused.      Whereupon, 


J 


*.t 


50 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


i-::. 


<i  I! 


III 


f  .  t 


JJ 


\m 


/,  (he  said  Notary^  at  the  request  aforesaid,  did  grotfjSt,  and  by 
these  presents  do  solemnly  grotCSit,  as  well  against  the  Maker  and 
Endorser  of  the  said  draft  as  against  all  others  whom  it  doth  or 
may  concern,  for  exchange,  re-exchange,  aiid  all  costs,  charges, 
damages  and  interest,  already  incurred  and  to  be  incurred  by 
reason  of  the  non-acceptance  thereof 

And,  I,  the  said  Notary,  do  hereby  certify  that  on  the  same 
day  and  year  above  icritten,  I  deposited  in  the  Post-office  in  said 
City  of  Buffalo,  and  paid  the  legal  jwstage  thereon.  Notice  of  the 
foregoing  demand,  non-accepta7ice  and  Protest, partly  written  and 
partly  printed,  signed  by  me,  and  folded  in  the  form  of  letters,  as 
follows,  viz.: 


Notice  fur  E.  R.  Andrews.     Directed, 


Chicago,  III. 


do  for 

do  for 

do  for. 

do  for 


do 
do 


Enclosed  to. 
do 


Each  of  the  above  named  places  being  the  reputed  place  of 
business  or  residence  of  the  persons  to  whom  the  said  ?iotice  was 
directed  respectively,  and  the  nearest  Post-office  thereto. 

Iftt  '^Vitne.SiS!  '^Vhcrrof,  /  have  hereunto  subscribed  my  name, 
and  affixed  my  se<d  of  office,  in  the  presence  of  John  Doe  and 
Richard  Roe,  Witnesses,  "  In  Testimonium  Veritatis.^^ 

CHARZES  E.  A  USTIN, 

Notary  Public. 

96.  Notice  of  Non- Acceptance.— As  soon  as  the  protest 

is  made  out,  notices  are  to  be  sent  to  all  the  persons  whom  it  is 
intended  to  hold  responsible  for  the  payment  of  the  draft.  In 
this  instance  the  drawer  is  the  only  person  to  whom  it  is  neces- 
sary to  send  a  notice,  but  it  often  happens  that  there  are  several 
indorsers  to  be  notified.  No  person  can  be  held  responsible  for 
the  payment  unless  notice  is  sent  him  as  early  as  the  next  day 
after  protest.     The  following  is  a  form  of  notice: 


NEGOTIABLE    TAPER. 

97.    Form  No.  14. 


51 


That 

drawn  by 


Buffalo,jfu<ne  S€i^l882, 


'CM.€ljL'C... 


—'y.<l'U4d€y/^  <l.^Pt.. 


for   -^^    d-u^^  iuf... 

^^«  Cj'Aiuui.'ei^cc.. J)  ODLARS 


dated ^u^e.  ^<i4  y/rj,  was  this  day  f  ratc.^ted  for  non-accept- 
ance, and  that  the  holder  looks  to  you  for  the  payment  thereof, 
acceptance  having  been  duly  demanded  by  me  and  refused. 

Very  respectfully, 


s.(i. 


'^^ 


■t.<:-ei 


"z-a^o.^ 


98.  Acceptance  Supra-Protest.— If  the  drawee  refuses 
to  accept  the  draft  when  it  is  presented  to  him,  we  have  seen 
that  it  is  necessary  to  have  it  protested  immediately,  and  to  send 
notice  to  every  person  whom  we  expect  to  look  to  for  payment. 
As  soon  as  the  draft  is  protested,  any  friend  of  the  drawer  who 
may  wish  to  prevent  him  from  being  sued,  and  to  save  the  credit 
of  the  draft,  may  offer  to  accept  it  for  the  honor  of  the  drawer. 
When  this  is  done  it  is  called  an  acceptance  supra-protest,  which 
means  an  acceptance  after  it  ^2.9>  protested.  Such  an  acceptance 
may  be  made  either  for  the  drawer  of  the  bill,  or  for  one  of  the 
indorsers. 

To  illustrate  an  acceptance  5wjt>m-/)ro^^,  let  us  suppose  that  the 
following  form  is  the  identical  one  of  "Form  No.  12,"  then  the 
acceptance  would  be  written  across  its  face  in  red  ink,  as  follows: 


52 


com.mekcial  law  and  business  forms. 
90.   Form  No.  15. 


$1,000"", 


V 


\  ft 


ys^kftersigS^ay 


Chicago,  III,  /^'^^    ^<^4  1SS2. 


U-i**^  or  order, 
DOLLARS 


Mrg^  a^mi^  of 


(!y.  d^^.  C/^^^-t'C't^s 


This  acceptance  of  the  draft  is  held  to  be  a  conditional 
promise  to  pay  on  the  part  of  Mr.  Miller.  The  holder  keeps  the 
draft  until  maturity,  the  same  as  if  the  drawee  had  accepted, 
and  then  presents  it  to  the  drawee  for  payment.  If  he  refuses 
to  pay,  the  draft  must  be  protested  for  non-payment,  the  same 
as  if  he  had  accepted  and  then  refused  to  pay. 

The  same  general  form  of  protest  is  used  for  non-payment*  as 
for  non-acceptance.  The  holder  of  a  draft  is  not  obliged  to 
accept  the  offer  of  any  person  to  make  an  acceptance  for  honor. 
If  the  drawee  refuses  to  accept  he  can  commence  proceedings 
asrainst  the  drawer  at  once. 

If  the  original  drawee  does  not  pay  the  draft  at  maturity,  the 
person  who  accepted  supra-protest  must  be  notified  within  the 
le^al  time  —  twenty-four  hours  —  or  he  cannot  be  held  liable. 

100.  Bank  Depositors.— In  the  larger  cities  when  a  person 
wishes  to  deposit  money  with  a  bank  he  is  required  to  furnish 
references  as  to  his  character  and  integrity.  If  these  are  satis- 
factory he  will  be  requested  to  write  his  name  in  a  signature 
book,  giving  his  name  in  the  same  hand  and  style  that  he  will  sign 
his  checks.  This  is  to  enable  the  teller  of  the  bank  to  judge  cor- 
rectly of  the  signatures  of  any  checks  that  may  be  presented  at  the 
bank  for  payment  which  are  signed  in  the  depositor's  name.  And 
especially  that  the  teller  may  compare  any  doubtful  signature 
with  the  genuine  one  in  the  signature  book.  This  is  an  essential 
precaution,  inasmuch  as  the  bank  is  responsible  for  the  genuine- 
ness of  the  signatures  to  all  checks  which  are  paid.  When  an 
account  is  opened  in  a  bank  with  a  partnership,  the  firm-name  is 


NEGOTIABLE    PAPER. 


53 


written  in  the  signature  book  by  each  member  of  the  firm  who 
is  allowed  to  sign  partnership  checks,  and  his  individual  name  is 
written  in  connection  therewith. 

101.  Methods  of  Depositing.— There  are  several  different 
methods  of  depositing  money  in  a  bank,  each  of  which  has  its 
advantages  and  disadvantages.  When  money  is  deposited  in  a 
bank  some  voucher  should  be  taken  from  the  bank  by  the  de- 
positor as  a  receipt  for  the  money.  The  voucher  is  sometimes 
a  hank-hook,  and  at  other  times  a  certificate,  or  simply  a  receipt, 
occasionally  a  teller's  check  is  taken. 

lOa.  Bank  Book.— When  a  person  deposits  money  with 
the  intention  of  drawing  checks  as  a  means  of  payment,  instead 
of  using  currency,  he  usually  takes  a  bank-book  as  a  voucher. 
This  is  a  little  book,  convenient  to  carry  in  one's  pocket,  which 
is  commonly  furnished  by  the  bank,  and  in  which  the  teller  of 
the  bank  enters  all  sums  of  money  left  by  the  depositor.  This 
little  bank-book  generally  has  printed  across  the  top  of  the 
double  page  something  like  the  following,  viz.: 


(( 


Dr.    BANK  OF  BUFFALO, 


in  account  with 


Cr. 


>? 


In  the  blank  space  is  written  the  depositor's  name,  and  each  sum 
deposited,  with  the  date,  is  placed  on  the  left  hand  page  of  the 
book.  This  entry  indicates  that  the  hank  is  debtor  to  the  depositor 
for  the  amount  so  entered.  Nothing  is  written  in  this  book  except 
by  the  teller  of  the  bank.  The  convenience  of  taking  a  bank-book 
IS,  that  money  can  be  drawn  out  by  check  at  any  time  without 
presenting  the  book.  As  each  successive  sum  of  money  is  depos- 
ited the  depositor  fills  out  a  deposit-ticket  showing  the  amount  of 
the  deposit,  and  hands  the  ticket  v^ith.  the  money  and  hook  to  the 
teller,  who  enters  the  date  and  amount  in  the  bank-book  If  a 
note  is  left  for  collection,  it  is  usually  entered  by  the  collection 
clerk  m  the  back  part  of  the  bank-book,  giving  date,  maker's 
name,  maturity,  place  of  payment,  and  amount.  When  it  is 
collected,  the  amount,  less  the  charges  for  collection,  is  placed 
in  the  book  as  a  regular  deposit.  It  may  be  here  stated  that 
most   business   men   do   not   consider  it  necessary  to  keep  an 


i'llr 


lA 


I 


rH\\ 


-i 


54 


COMMEliClAL    LAW    AND    BUSINESS    FORMS. 


■li 


I  • 


■  ni 


I 


account  with  a  bank  in  their  general  account  books.  The  bank- 
book and  the  records  of  deposits  and  checks  which  are  usually 
kept  on  the  back  of  the  stubs  in  the  check-book,  being  quite 
sufficient  for  all  necessary  information,  and  as  vouchers. 

103.  Checks  Paid. — When  the  depositor's  checks  are  paid 
by  the  bank  they  are  not  at  that  time  entered  in  the  depositor's 
bank-book,  but  are  filed  away,  and  all  entered  on  the  right  hand 
page  of  his  book  at  the  end  of  one,  two,  or  three  months, 
according  to  custom.  At  intervals  of  customary  time  the 
depositor  leaves  his  bank-book  with  the  bank,  when  all  the 
checks  which  have  been  paid  are  entered,  and  the  book  is 
balanced  by  entering  —  usually  in  red  ink  —  the  difference  be- 
tween the  amount  of  the  deposits,  and  the  checks,  Under  the 
paid  checks  on  the  right  hand  side.  The  bank-book  is  then 
ruled  up,  and  the  balance  in  bank  is  brought  forward  on  the  left 
hand  side  of  the  book  similar  to  the  first  entry.  When  the 
bank-book  is  again  called  for  by  the  depositor,  all  the  cancelled 
checks  are  returned  with  the  book. 

104.  Deposit  Ticket.— A  deposit  ticket  is  a  printed  mem- 
orandum with  blank  spaces  for  inserting  name  of  depositor,  date, 
and  amount  of  funds  deposited.  It  generally  has  printed  upon 
it  a  description  list  of  the  kinds  of  funds  deposited  as  per  form 
following.  These  deposit  tickets  are  furnished  by  the  bank  for 
the  use  of  the  depositors,  and  should  be  filled  up  by  the  deposi- 
tor, according  to  the  printed  divisions  on  the  ticket  and  the 
amount  extended.  The  deposit  ticket  is  a  great  convenience  to 
the  bank  teller.  He  compares  the  amount,  as  counted  by  him- 
self, with  the  amount  on  the  ticket,  and,  if  any  question  arises 
as  to  the  accuracy  of  th3  figures  in  the  depositor's  bank-book, 
he  has  the  deposit  ticket  as  a  voucher. 

The  deposit-ticket  often  proves  as  useful  to  the  depositor  as  it 
is  to  the  teller.  He  may  at  some  time,  for  instance,  discover 
that  there  is  a  mistake  in  his  cash  account,  and  may  hastily  come 
to  the  conclusion  that  there  must  have  been  a  mistake  in  entering 
his  deposit  in  the  bank-book.  In  such  case  nothing  could  be 
more  convincing  than  to  see  his  deposit-ticket  which  was  filled 
out  by  himself. 


NEGOTIABLE    PAPER. 


55 


^y- 


105.    Form  No.  l5^ 
DEPOSITED   IN 

BANK   OF  BUFFALO. 

Buffalo, 188    . 


Currency^    . 
Checksy 

DrafUy 


Amount, 


106.  Checks.— A  check  is  a  written  order  upon  a  bank,  di- 
recting that  a  certain  amount  of  money  be  paid  to  a  person  men- 
tioned therein,  or  to  his  order,  or  to  bearer.  A  check  is  one  of 
the  simplest  forms  of  negotiable  paper.  It  may,  or  may  not,  be 
negotiable.  There  is  no  uniform  rule  for  the  wording  of  checks, 
either  when  printed  or  written.  Sometimes  the  words  "or 
order  "  are  used  after  the  payee's  name,  sometimes  "  or  bearer," 
ajid  sometimes  they  are  made  payable  to  Nearer,  without  men- 
tioning any  payee  by  name.  If  both  order  and  hearer  are  omitted, 
the  check  is  not  negotiable.  Checks  are  always  drawn  on  banks 
or  bankers,  and  are  always  payable  at  sight,  and,  therefore, 
never  need  acceptance.  It  is  customary  with  business  men 
to  have  their  checks  made  up  in  book-form,  and  generally  they 
are  printed  payable  to  the  order  of  the  person  to  whom  they  are 
made  payable.     But  the  loose  checks,  which  aie  kept  by  the 


i  % 


i 


I 


MM    ' 


w 


56 


COMMERCIAL    LAW    AND    BUSINESS    FOKMS. 


bank  for  the  use  of  their  customers,  are  generally  printed  pay- 
able to  bearer.  When  a  check  is  payable  to  bearer  the  bank 
does  not  take  upon  itself  any  responsibility  as  to  the  identity  of 
the  holder.  Prudent  business  men  keep  most  of  their  money 
deposited  in  bank,  reserving  only  a  sufficient  amount  to  meet 
small  expenses.  All  payments  of  any  considerable  amount  are 
made  with  cheeks.  A  record  of  each  check  should  be  kept  on 
the  stub  from  which  it  is  taken  in  the  check-book;  this  history 
should  befall  and  explicit.     The  following  is  a  common  form  of 

check* 

107.   Form  No.  16. 


No.  55. 


Buffalo,  N.   Y.y   J^u^e   /,    1882. 

FIRST  NATIONAL  BANK, 


Pny    d  at. 


$2,000'\ 


(yfl^tz^/Aeti^d,  or  order, 
DOLLARS 


108.  Checks  as  Receipts.— When  a  check  is  made  payable 
to  the  payee,  or  order,  it  must  be  indorsed  by  the  payee  before 
payment;  that  is,  the  person  to  whom  it  is  payable  must  write 
his  name  across  the  hack  of  the  check.  Banks  generally  require 
all  checks  to  be  indorsed  whether  they  are  payable  to  order  or 
bearer.  When  a  check  is  paid  by  a  bank,  it  is  cancelled  with  a 
stamp,  but  not  destroyed.  The  cancelled  checks  are  returned  to 
the  depositor  when  his  bank-book  is  balanced  up,  and  they  answer 
as  vouchers  to  the  drawer,  especially  when  they  were  made  pay- 
able to  the  payee  or  order,  and  come  back  from  the  bank  with 
his  endorsement  on  the  back.  The  indorsement  is  evidence  of 
payment  to  the  indorser,  and  the  check  therefor  is  a  receipt. 

109.  Certified  Checks. — The  presumption  is  that  when  a 
check  is  drawn  upon  a  bank  there  is  enough  money  in  the  bank 
to  the  credit  of  the  drawer  to  meet  it.  This  is  not  always  true. 
Sometimes  business  men  draw  checks  when  they  know  they  have 
not  a  balance  to  their  credit  in  the  bank  large  enough  to  pay 


M 


1  .t!',' 


1^ 


NEGOTIABLE    PAPER. 


57 


them,  but  they  expect  they  will  be  able  to  deposit  enough  before 
their  checks  are  presented  for  payment.  Unscrupulous  persons 
frequently  draw  checks  and  attempt  to  pass  them,  knowing  that 
they  have  no  money  in  bank  to  meet  them,  and  never  intending 
to  deposit  funds  to  meet  them.  Business  men  are  not  safe, 
therefore,  in  taking  checks  from  strangers  unless  the  checks  are 
"certified."  To  get  a  check  "certified"  it  should  be  presented 
to  an  officer  of  the  bank;  generally  the  cashier  certifies.  If  the 
balance  to  the  credit  of  the  drawer  of  the  check  is  large  enough 
to  meet  it,  he  will  write  across  the  face  of  the  check  the  word 
"  certified,"  and  sign  his  name  below  it  as  cashier.  More  com- 
monly, perhaps,  the  certification  of  the  check  is  made  by  writing 
across  its  face,  as  follows,  viz.:  "Good  when  properly  indorsed," 
and  signed  by  the  cashier.  This  makes  the  bank  responsible  for 
the  payment  of  the  check,  even  if  the  drawer  contrives  to  get 
his  money  out  by  drawing  other  checks  before  the  certified  check 
is  presented  for  payment.  If  a  bank  certifies  a  fraudulent  check 
it  will  be  liable  for  it.  The  certification  of  a  check  is  much  of 
the  same  nature  of  an  acceptance  of  a  draft,  the  holder  looks  to 
the  bamk  for  security  instead  of  the  drawer,  and  generally  the 
bank  charges  up  the  check  to  the  drawer  when  it  is  certified. 

The  following  form  will  illustrate  the  manner  of  certifying  a 
check: 

no.   Form  No.  17. 


$^00^-^.       ^    I     Buffalo,  N.  Y.,  <&'^/t/.    .r,    1882. 


Is 


|A|Nit)F  COMMERCE. 


^     s|     ^           Pay  to 
cMe^^Me^^. 

3^  •>'-V.>4 


'•"N 
^ 


^■^4.^,  ^M^^^^  or  order, 
^%\DOLLARS 


111.  Cash  Checks. — Business  men  generally  treat  checks 
the  same  as  bank  currency,  counting  them  as  cash,  and  deposit- 
ing them  with  the  currency  as  cash.  When  a  check  is  received 
on  account  of   a  debt  the  obligation  of   the  debtor  is  not  dis- 


I 


li 


■'<. 


58 


COMMERCIAL   LAW   AND    BUSINESS    FORMS. 


■ 


■11 


charged  if  the  check  is  not  paid,  unless  there  was  an  agreement 
to  that  effect  between  the  parties.  The  check  is  regarded  as  a 
means  of  getting  the  money,  but  not  as  payment  until  the  money 
is  received,  provided  the  holder  of  the  check  is  guilty  of  no 
neglect.  When  a  check  comes  back  from  the  bank  into  the 
hands  of  the  debtor,  with  the  creditor's  name  indorsed  on  the 
back,  it  is  evidence  of  payment. 

11^.  Forged  Checks. — It  has  already  been  stated  that 
banks  require  their  depositors  to  write  their  names  in  the  signa- 
ture book,  so  that  they  may  have  a  criterion  by  which  to  judge 
of  the  correctness  of  the  signature.  The  responsibility  is  en- 
tirely with  the  bank,  and  the  teller  must  be  able  to  identify  each 
signature.  If  the  signature  to  a  check  is  forged  no  one  has  any 
claim  upon  the  person  whose  name  was  forged,  and  if  a  bank 
pays  such  a  check  the  loss  will  be  its  own.  A  forged  signature 
cannot  be  ratified  by  the  person  whose  name  was  forged,  because 
the  act  is  criminal,  and  the  ratification  of  it  would  be  opposed  to 
public  policy. 

113.  Raised  Checks. — Checks  are  sometimes  written  so 
carelessly  that  they  afford  every  opportunity  for  inserting  a 
word  and  a  figure,  by  which  to  make  it  express  a  larger  sum  of 
money.  This  is  sometimes  done,  and  the  check  is  then  said  to  be 
raised.  If  a  check  has  been  raised  above  the  amount  for  which 
it  is  drawn,  and  is  paid  by  a  bank,  the  drawer  of  the  check  will 
be  liable  for  the  whole  amount  paid,  if  he  contributed  to  the  al- 
teration by  carelessly  leaving  space  for  inserting  a  word  and 
figures  to  increase  the  amount ;  but  if  properly  written,  only  the 
original  amount  of  the  check  can  be  charged  to  the  drawer. 

114.  When  Payable.— Generally,  no  time  of  payment  is 
specified  in  a  check,  and  it  is  held  to  be  payable  immediately 
upon  presentation.  When  received  in  the  same  place  where  it 
is  payable  it  should  be  presented  for  payment  as  soon  as  the 
following  day;  if  held  longer,  it  will  be  at  the  risk  of  the  holder. 
If  a  check  is  not  presented  for  payment  within  a  reasonable 
time,  and  the  bank  fails,  the  holder  must  bear  the  loss  if  there 
was  money  in  the  bank  to  meet  it.  Checks  should  be  dated  the 
day  upon  which  they  are  drawn,  and  if  made  payable  some  time 


NEGOTIABLE    PAPER. 


59 


in  the  future,  the  time  should  be  stated  in  the  body  of  the 
check.  If  a  check  is  dated  ahead,  it  is  worthless  until  the  arrival 
of  the  date,  but  it  may  be  good  when  that  time  arrives. 

1  lo.  Certificate  of  Deposit.— A  certificate  of  deposit  is  a 
receipt  given  by  a  bank  certifying  that  the  depositor  has  left 
with  the  bank  a  specified  amount  of  money  to  be  paid  to  him  or 
to  his  order,  on  the  return  of  the  certificate  properly  indorsed. 
Checks  cannot  be  drawn  against  certificates  of  deposit,  as  in  case 
of  a  bank-book,  nor  can  less  than  the  full  amount  be  drawn  con- 
veniently, but  they  are  convenient  for  deposits  which  are  made 
for  safe  keeping  for  a  specified  time,  and  they  may  be  used  for* 
making  remittances,  but  are  not  generally  as  convenient  for  that 
purpose  as  drafts.  The  following  will  illustrate  a  common  form 
of  certificate  of  deposit: 

116.   Form  No.  18. 


No.  135. 

BANK  OF  BUFFALO. 

Buffalo,  X.   i:,    Su-^e  <fO^    1882. 
^-    ^-     S<i4.^^^       has    deposited    in    this    Bank 

c/-i^e  cyA^ud<i^</.. DOLLARS 

payable  to  the  order  of  -^■t^yyidy 


in   Currency  on  return  of  this   Certificate  properly  en- 
dorsed. 


$5000'' 


•^1 


7 


'^n^-a.'Pt. 


-m. 


'Oyt/yi 


Teller. 


Canh 


ler. 


J 


.f, ' 


117.  Teller's  Check. — Deposits  are  sometimes  made  for 
which  a  teller's  check  is  received.  The  theory  of  such  a  trans- 
action is  that  the  money  deposited  is  placed  to  the  credit  of  the 
teller,  instead  of  the  depositor,  and  then  the  teller  draws  his 
check  for  the  same  amount  payable  to  the  depositor  or  order. 
This  check  is  negotiable,  and  is  equivalent  to  a  certified  check  so 
far  as  establishinc:  its  value  is  concerned. 


00 


COMMERCIAL    LAW    AM)    BUSINESS    FuRMS. 


118.  Special  Deposit.— In  the  several  methods  of  deposit- 
ing already  mentioned,  the  bank  is  under  no  obligation  to  return 
the  same  money,  nor  is  it  expected  that  it  will  be  kept  and  returned 
to  the  depositor.  But  he  can  make  a  special  deposit  of  a  package 
of  money  or  other  valuables,  and  have  the  same  identical  thing 
returned  to  him  when  called  for.  When  a  special  deposit  is 
made,  the  bank  has  no  right  to  use  it  in  any  way,  and  in  some 
cases  the  use  of  such  deposit  is  made  a  criminal  offense. 

119.  Certificate  of  Stock.— A  certificate  of  stock  in  a 
bank,  or  in  any  other  joint-stock  or  incorporated  association,  is  a 
.written  instrument  which  certifies  that  the  person  named  therein 
owns  a  certain  number  of  shares  of  the  capital  stock  of  the 
bank  or  association.  A  certificate  of  bank  stock  is  generally 
signed  by  the  president,  and  it  is  evidence  of  ownership  to 
the  amount  specified.  The  shares  are  generally  one  hundred 
dollars  each.     Certificate  of  Stock  : 

1»20.    Form  No.  19. 

STATE    OF    NEW-YORK.  | 

Fifty  Shares.     § 

Merchants'  Bank  of  Buffalo.  | 

This  Certifies  that  darence  L.  Clarke    is  proprietor  of  ^ 
Fifty  Shares  in  the  Capital  Stock  of  t/ce  0 

MER  CHANTS'  BANK  OFB  UFFAL  0,     g 

tramferable  at  the  said  Bank  by  tlie  said  Stockholder  or  by  g 
his  Attorney  on  tfie  return  of  this  Certificate.  g 

Buffalo,  N.  Y.,10thdayofJuly,  JS82. 


m     CAPITAL, 

I    §300,000.     ^^    15 

0 


a     8HARE8, 

S  $100  EACH. 


da^ 


C/  S^  ^^J^u',^/4   President. 


1  *-i  1 .  Voting  by  Proxy. — The  directors  of  a  bank  are  chosen 
at  an  election  held  by  the  stockholders,  at  which  election  each 
stockhokler  is  entitled  to  cast  a  certain  number  of  votes  in  pro- 
portion to  the  whole  number  as  his  number  of  shares  is  to  the 
whole  number.  When  a  stockholder  cannot  be  present  at  the 
election,  he  generally  appoints  some  one  as  his  proxy  to  vote 
for  him  as  follows  : 


I 


NEGOTIABLE   PAPEE.  61 

12a.  Proxy. 

Form  No.  20. 

^  gttaur  all  Pen  by  X)xtH  ^xmxiX%,  That  I,  Clarence  Z.  Clarke, 
ao  hereby  constitute  and  appoint  A.  P,  Wright  Attorney  and 
Agent  for  me  and  in  my  name,  place  and  stead,  to  vote  as  my 
Proxy  at  the  next  election  for  Directors  of  the  Mercharits'  Bank 
of  Buffalo,  according  to  the  number  of  votes  I  should  be  entitled 
to  vote  if  then  personally  present, 

^tt  %^\iM^^  Whereof,  I  have  hereunto  set  my  hand  and  seal, 
this  twenty-fifth  day  of  August,  one  thousand  eight  hundred  and 
eighty-two. 


Sealed  and  delivered  In  presence  of 


^'i'e^€^ 


€l^l^€. 


^ce. 


15J3.  Transfer  of  Stock— The  certificate  of  stock  speci- 
fies that  the  holder  may  transfer  his  stock  at  the  bank  himself, 
or  it  may  be  done  by  his  attorney.  The  following  will  illus- 
trate the  form  for  appointing  an  attorney  for  that  purpose  : 

134.  Transfer  of  Stock. 

Form  No.  21. 

^ttOUJ  M  Pen  by  these  gre^ewt^,  That  I,  Clarence  L.  Clarke, 
do  hereby  constitute  and  appoint  Reuben  Heacock  my  true  and 
lawful  Attorney  for  me  ajid  in  my  name  to  sell,  assicpi,  transfer 
and  set  over  aU  my  right,  title  and  interest  in  and  to  Fifty  Shares 
of  the  Capital  Stock  of  the  Merchants'  Bank  of  Buffalo  as 
represented  by  Scrip  ]Vo.  15,  hereby  ratifying  and  confirming  all 
ttiat  my  said  Attorney  may  do  by  virtue  thereof 

Wxirn^^  my  hand  and  seal,  this  twentieth  day  of  September  in 
the  year  one  thousand  eight  hundred  and  eighty-two.  ' 


"^^rXTJNTESS  s 


tZ't^fZ^-^ 


i^^^-^. 


w-a^U'Ui.. 


12*5.  Foreign  Bills  of  Exchange.— These  are  generally 
drawn  m  '^ sets.''  That  is,  two  or  three  bills  are  drawn  for  the 
same  sum  of  money,  but  they  are  so  written  that,  when  one  of 
the  "  set "  is  paid,  it  cancels  them  all.  Foreign  bills  are  drawn 
in  the  currency  of  the  country  where  they  are  payable.  Tlie 
reason  they  are  drawn  in  sets  is,  that  one  may  be  sent  by  one 


i 


i*. 


62 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


1- 
I 


ship,  and  a  second  by  another,  and  so  on,  so  that,  in  case  the 
first  is  lost,  another  may  reach  its  destination.  Formerly  they 
were  drawn  in  sets  of  three,  but,  at  the  present  time,  very  few 
banks  draw  more  than  ttrOy  and  some  draw  only  a  single  draft. 
Foreign  bills  do  not  differ  in  principle  from  ordinary  inland 
drafts.  The  following  forms  will  illustrate  a  "set"  consisting 
of  two: 

1'20.   Form  No.  22. 


n 

b 

H 

0 


exchange  Ux  £l00(f\ 

Buffalo,  N.  Y.,jfuA^  f,  1882. 
(D^/  ^t^M  of  this  /^'^'^  of  J^xchange  /dec<iy7^</ un- 
paid) pay  to  the  order  of  ^(}<t^.    J2^e.<i.    (&f'.    ^^-c^fCa^ 

(i^^ne-   c/A.c.i4d-€i/yiy€t    c/o44^i'V€^    ^^^e^'Ct^^^i^ 

Value  received  and  charge  the  same  to  account  of 

Cashier  City  Bank. 


'yi^o^n 


€14^ 


I 


To  (TA 


No.  620. 


127o    Form  No.  23. 


ff  I 


<! 
P) 

EH 

H 

0 


un- 


Buffalo,  N.  Y.,SuA^  <,   1882. 
C^/  ^c^A'^ of  this  deoa^€/of  Exchange  /^t^^ 
paid)  pay  to  the  order  of  ^^2^.    -^^.    ^wC  ^-^if^-4 

(^'i^e   C^Ao.'Ud-U'ru/  (y^-a'U'n.iZd.    ^Qrled^e^rt-f^ 

Value  received  a7id  charge  the  same  to  account  of 

No.  620. 


NEGOTIABLE    PAPER. 


63 


138.  The  Protest  and  Notice.— The  protest  and  notice 
of  a  foreign  bill  when  not  accepted,  or  when  not  paid,  should 
be  made  and  given  by  a  notary  public.  And,  although  the  law 
merchant  does  not  require  that  an  inland  bill  should  be  form- 
ally protested  by  a  notary  public,  but  only  that  the  drawer  and 
indorsers  should  be  notified  of  the  refusal  to  accept  and  pay, 
yet,  by  custom,  and  by  the  statutes  of  various  States  and  coun- 
tries, the  notarial  certificates  of  demand,  and  the  protest  thereof, 
are  made  presumptive  evidence,  and,  therefore,  are  almost  uni- 
versally so  demanded.  The  object  of  the  protest  and  notice  is 
to  fix  the  liability  of  the  parties  who  were  conditional  debtors. 
The  protest  should  be  made  on  the  very  day  the  demand  is 
made  and  refused,  and  notices  of  protest  should  be  sent  to  all 
to  whom  it  is  intended  to  look  for  payment  the  same  day,  or 
the  day  following.  Notice  is  generally  given  to  the  parties 
it  is  intended  to  hold  in  meriting,  but  it  may  be  verbal.  The 
notice  should  designate  the  particular  draft  or  note  so  dis- 
tinctly, that  the  party  receiving  it  cannot  be  mistaken  as  to  the 
identity  of  the  paper. 

130.  Business  Paper.— Negotiable  paper  is  divided  into 
two  classes,  namely:  husiriess  and  accommodation.  Business 
paper  is  that  which  is  given  for  value  ;  that  is,  where  there  is  a 
real  indebtedness  to  the  extent  of  the  sum  expressed  in  the 
paper,  and  the  payee  holds  the  paper  as  evidence  of  such  in- 
debtedness against  the  drawer  or  acceptor  of  the  bill,  or  the 
maker  of  the  note.  Such  paper  is  founded  upon  a  real  business 
transaction,  and  it  is  as  good  in  the  hands  of  the  original  payee, 
as  in  the  hands  of  any  subsequent  holder. 

130.  Accommodation  Paper.— If  A.  makes  and  deliv- 
ers his  own  note  to  B.,  merely  to  enable  B.  to  use  it  for  his  own 
benefit,  and  with  the  understanding  that  B.  will  provide  for  and 
pay  it  at  maturity — A.  sim])ly  lending  his  name  and  credit  for 
the  accommodation  of  B. — such  a  note,  or  bill,  is  accommodation 
paper. 

A.  will  not  be  bound  to  pay  such  a  note,  if  it  remain  in 
the  hands  of  B.,  because  there  is  no  consideration.  But,  if 
it  passes  into  other  hands  before  maturity,  he  will  be  bound  to 


« 


64 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


the  holder  the  same  as  if  there  had  been  a  good  considera- 
tion. If  it  were  not  so,  the  note  Mould  not  serve  the  i)urpo8e 
for  which  it  was  given,  namely,  the  loan  of  A.'s  credit  for  the 
])enefit  of  B.  Should  B.,  before  the  maturity  of  the  note,  place 
money  in  the  hands  of  A.,  wherewith  to  pay  it,  he  could  not 
afterwards  withdraw  the  monev  without  the  consent  of  A.,  and, 
if  he  should  make  an  assignment,  A.  could  hold  the  money  for 
l)ayment  of  the  note. 

ttll.  Till  lie  Received. — These  words  are  commonlv  used 
in  negotiable  paper,  but  they  are  not  indispensable.  The  pre- 
sumption of  the  law  is,  that  all  negotiable  paper  is  given  for 
value,  whether  it  is  so  expressed  or  not.  The  burden  of  proving 
a  want  or  failure  of  consideration,  or  an  illegality  of  considera- 
tion for  negotiable  paper,  always  rests  upon  the  party  who  sets 
up  that  defense.  When  these  words  are  used  in  a  note  or  bill 
they  mean  that  the  value  was  received  from  the  payee  by  the 
maker,  or  drawer,  but  it  is  always  subject  to  proof. 

15I2.  Order  or  Bearer.— The  commercial  privileges  of  ne- 
gotiable paper  have  received  the  most  liberal  construction  from 
the  courts,  but  upon  the  condition  that  it  shall  contain  one  or 
the  other  of  these  words. 

It  is  optional  with  the  parties  whether  they  use  the  word 
"  order"  or  "  bearer.''  If  the  paper  is  made  payable  to  the  payee, 
or  "  order,''  it  cannot  be  transferred  to  another,  except  by  the 
indorsement  of  the  payee.  Tliat  is,  the  payee  must  write  his 
name  across  the  back  in  order  to  convey  the  title  to  another.  If 
it  is  made  payable  to  the  payee,  or  ''bearer"  the  title  can  be 
transferred  by  delivery,  without  indorsement.  When  paper 
which  is  payable  to  bearer  is  stolen  or  lost,  any  person  who  takes 
it  from  the  thief  or  tinder,  in  the  regular  course  of  business,  for 
value,  without  any  knowledge  or  suspicion  of  its  having  been 
stolen  or  lost,  will  have  a  good  title  to  it,  and  can  enforce  tlie 
payment  without  being  under  any  obligations  to  the  oricrinal 
owner.  Obviously,  therefore,  for  the  holder's  protection,  it  is 
the  safer  way  to  have  all  negotiable  pai)er  made  i)ayable  to  his 
order. 


M 


J 

i 


NEGOTIABLE    PAPER. 


65 


133.  Maker  or  Makers. — A  note  may  be  made  by  one 
person,  or  by  two  or  more  persons.  When  it  is  signed  by  one 
person  only,  it  is  called  an  individual  note.  When  signed  by 
two  or  more  persons  it  may  be  2i  joint,  or  a,joi}it  and  several  note. 

134.  Individual  Notes. — These  maybe  written  in  many 
different  forms  relating  to  time  and  place  of  payment,  etc. 
The  following  will  illustrate  a  common  form  : 

13o.    Form  No.  24. 


4%  J^% 


^^'    $600^'  Buffalo,  X.   Y.,jf^A,  ^^4  1882. 

cy-^Cu^  L^-uyd.  after  date  cf  promise  to  pay  to 

the  order  of  S^<i'^.  j^e^x^^e  (W'.  ^A^Z-o.^. 

"^i  S^^'^^<A^i/. ..DOLLARS 

at  cKkd/  cJ^i/^'c'yi^ M€i^yil,    Cy^AL-^y,^    C^  # 
Without  defalcation,  value  received. 


V 

T- 


136.  Joint  Notes. — When  two  or  more  persons  sign  a 
note  it  will  depend  upon  the  wording  of  the  note  whether  it  is  a 
joint  note,  or  a  joint  and  several  note.  The  following  form  is  a 
joint  note  only: 

137.    Form  No.  25. 


^a^^««^S 


4 


T 


$1200'\  Rochester,  X   Y.,  d,^^  ^o,  1882. 

C/t^<x  cym<i'yi^Ad  after  date  t^-ejyromise  to  pay 

to  the  order  of  crA-i^Yt  (^e<^-^ed 

c/f^ti^-cii^  iiQu.'n.-cA^iZ.. D  OLLARS 


Value  Received, 


/./^  (^/-  (^^.^ 


^/ 


No.  8. 


^^^■^  ^.  ^ 


■e-f. 


I 


4 


TT 


I)  I, 


m 


COMMERCIAL    LAW    AND    KLSINKSS    FORMS. 


l;l^.  Joint  and  Several  Notes.— It  is  frequently  much 

safer  for  the  holder  of  a  note  that  it  should  be  made  both  joint 
and  several,  so  that  the  makers  may  be  sued  either  jointly  or 
severally  thereon.  The  following  two  notes  are  joint  and  several 
notes  : 

1  :I9.    Form  No.  26. 


^-^1    $1000'\                  Buffalo,  X.   i:,  0^/i^-t:/'s^/,  1882. 
WW          '^i^  (^mo-^^^^  afUr  date -toe.  jointly  and  severally 
v^-S  /^'*t)/>u'se  ^ojL>^ify  j^-^^i^^  C^€/€i'i^nd or  order 


y^M  ^^^  cT/<>i^€i^t€/Us:^^^J}^^j^^^r^ 


MK 


^^ 


a 


«  d  Qj''j€l^l- 


4  <^44  <^  ^j.r:..c..:-. 


KS    Value  Received. 


110.    Form  No.  27. 


'SNQ© 


gJLl    <^^^^"- 


Q 


li 


^^Uz.^C'^ 


Buffalo,  X.   Y.,  O^t^ao/4  ^^^-' 
r,i^  after  date  Cy^ promise  to  pay  to 


\^the  order  </ c^  d^  <:^«^..K.^..t 


^  at    the    C/J€i'yi^  ojf:    ^<3'>«-*^«-^<:«,     C/c)-e4j^jL€i^^     C^.     ^l^. 

a/l^    Jl due  received.  ^A<ui,.   J^^'Hz^/^ 

%t\  No.  n.  cM.    ^  <^«^. 


141.  Firm  Notes. — When  a  note  is  signed  in  the  name  of 
a  partnership  it  is  generally  a  joint  note,  whether  it  is  written 
"I  promise  to  pay"  or  "we  promise  to  pay."  And  when  a  note 
is  written,  "we  jointly  or  severally  promise  to  pay,"  the  word 
or  is  construed  to  mean  "and,"  in  which  case  it  is  a  joint  and 


NEGOTIABLE    PAPER. 


67 


several  note.  Firm  notes  are  good  as  against  the  partnership 
when  given  by  one  of  the  partners,  provided  they  are  given  for 
something  which  comes  within  the  scope  of  the  partnership 
business,  but  when  given  for  something  outside  of  the  partner- 
ship business  they  are  only  good  as  against  the  individual 
partner  who  signed  the  note. 

14^2.  Interest  Notes.— A  note  does  not  draw  interest  until 
after  maturity,  unless  it  is  written  "with  interest,"  or  some 
equivalent  phrase.  Neither  of  the  foregoing  notes  would  draw 
interest  until  after  maturity. 

143.    Indorsements.— Indorsements  are  made  for  the  pur- 
pose of  transferring  the  title  or  ownership  of  negotiable  paper 
from  one  person   to    another.     This   quality  of    transferability 
gives  to  negotiable   paper   its   great  value  and  importance  in 
commerce.     The  payee  of  a  note  or  other  negotiable  paper  may 
transfer  his  title  to  another  person  by  writing  across  the  back  of 
It  his  own  name,  and  then  delivering  it  to  the  other  person      In- 
dorsements are  generally  made  before  the  maturity  of  the  paper 
but  they  are  sometimes  made  after.     When  no  date  is  connected 
W'lth  the  indorsement  the  presumption  is  that  it  was  made  before 
the  paper  fell  due.     When  the  payee  of   negotiable  paper  has 
indorsed  a  note  or  bill,  he  is  then  called  the   i?idorser,  and  the 
person  to  whom  he  transferred  the  title  is  called  the  i?idorsee. 

144.  Effects  of  Indorsement.-There  are  t.co  distinct 
effects  produced  by  the  indorsement  of  negotiable  paper  The 
first  or  />r/m«ry  effect  is  to  transfer  the  title  to  the  paper  from 
the  mdorser  to  the  indorsee.  The  next  or  secondary  effect  is  to 
make  the  indorser  condkionally  liable  for  the  payment  of  the 
paper.  The  indorsement  is  a  contract  by  which  the  indorser 
makes  himself  liable  to  the  indorsee  and  every  subsequent  holder. 

145.  Liability  of  Indorser  .-There  is  an  implied  guar- 
antee on  the  part  of  every  indorser,  in  favor  of,  and  with  the 
indorsee  and  every  subsequent  holder.  First,  that  the  paper 
Itself  and  all  the  names  thereto,  are  good  and  genuine;  second, 
that,  he  himself  has  a  good  title  to  it;  third,  that  he  is  legallv 
competent  to  bind   himself    by  indorsement;  fourth,  that  the 


5J, 
»  t 


;»& 


I  f^ 


V. 


68 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


maker  of  the  paper  is  competent  to  bind  himself  to  the  pay- 
ment of  the  bill,  and  will  pay  it  on  presentment  at  maturity; 
//?A,  that  if  it  is  not  paid  by  the  maker  or  acceptor  when  duly 
presented  at  maturity,  the  indorser,  if  duly  notified  of  the  dis- 
honor, will  pay  the  same  to  the  indorsee,  or  to  any  subsequent 
holder.  But  if  a  note  or  bill  is  indorsed  by  a  person  under  legal 
age,  he  cannot  be  held  liable  for  the  payment. 

146.  Forms  of  Iiidorsciiieiit.— Mr.  Chitty,  in  his  work 
on  *'  Bills  of  Exchange,"  gives  six  different  kinds  of  indorsement, 
which  he  names  as  follows:  Blank,  Full,  General,  Qualijied, 
Conditional,  and  Restrictive.  The  first  three  are  very  commonly 
used;  the  la^t  three  are  seldom  used  in  business.  Each  has  its 
peculiar  advantages  and  disadvantages. 

147.  Blank  Iiulorsemeilt.— When  the  payee  indorses  a 
note,  or  other  negotiable  paper  by  simply  writing  his  name 
across  the  back  of  it,  it  is  called  a  Blank  Indorsement.  When 
a  blank  indorsement  is  made,  the  name  should  be  written  far 
enoucrh  below  the  end  of  the  bill  to  leave  a  blank  space  above  it 
lart^e  enouo-h  for  the  insertion  of  the  name  of  the  indorsee. 
The  fact  of  its  having  been  so  written  is  probably  what  gave  it 

its  name. 

So  long  as  this  indorsement  continues  blank,  the  note,  or  bill, 
can  be  transferred  by  mere  delivery,  the  same  as  if  it  were 
payable  to  hearer.  The  disadvantages  of  a  blank  indorsement 
are,  that,  if  the  paper  should  be  stolen,  or  lost,  or  fraudulently 
negotiated  by  an  agent,  and  get  into  the  hands  of  an  innocent 
holder  for  value,  the  holder  of  it  wouhi  be  entitled  to  recover 
the  amount  due  upon  it,  in  opposition  to  the  claims  of  the  per- 
son who  was  the  owner  when  it  was  lost. 

But  the  holder  of  paper,  which  has  been  indorsed  in  blank, 
may  protect  himself  from  such  danger  of  loss  by  filling 
up  the  blank  above  the  indorser's  name,  and  making  it  payable 
to  himself  or  order.  'The  holder  is  at  liberty  to  write  anything 
above  the  indorser's  name  which  shall  protect  his  own  interest 
without  interfering  in  any  way  with  the  liability  of  the  in- 
dorser. When  a  note  is  indorsed  on  the  back,  it  is  customary 
to  turn  the  left  end  uppermost.     The  reason  of  this  is,  that  it  is 


I 


NEGOTIABLE    PAPER. 


69 


natural   for   right-handed   persons  to  do  so,   and  it,  therefore, 
looks  awkward  in  the  opposite  position. 

148.    Full   Indorsement.— When  the  holder  writes  upon 
the  back  of  a  note,  or  bill,  the  name  of  the  person  to  whom  it  is 
to  be  paid,  above  his  own,  and  makes  it  payable  to  his  order 
It  IS  called  a  full  indorsement.     This  indorsement  prevents  its 
bemg  again  negotiated,  unless  it  is  indorsed  by  the  first  indorsee. 
It  IS,  perhaps,  the  most  common  and  the  most  satisfactory  of  all 
the  indorsements.     If  stolen,  or  lost,  or  misappropriated,  it  can- 
not  be    negotiated,    unless   the  bill  is  again   indorsed  by   the 
rightful  holder.     Indorsements  should  alwavs  be  made  on  the 
back  of  a  note  or  bill,  because  it  is  the  custom  of  business  men- 
but  the  legal  effect  would  be  the  same  if  thev  were  made  on  the 
face. 

149.  Note  and  Indorsements.— The  followino- forms  will 
illustrate  a  note,  with  the  blank  and  full  indorsements  made  on 
lUback.  This  note  is  turned  over  with  the  left  end  uppermost 
an<l  Mr.  D.  P.  Eells,  the  payee,  first  writes  his  name,  only,  across 
the  back,  which  is  the  blank  endorsement.  Then  to  illustrate 
the  full  endorsement,  he  WTites  first,  "  Pay  Wm.  Case,  or  order  " 
and  signs  his  name  below;  as  shown  on  the  following  page.       ' 

150.  Individual  Negotiable  Note. 

Form  No.  28. 


$3000'\ 


<^. 


<i-U^ 


i^l  '^^  '"•'^«'-  of^.S^  ^^^^... 


Clevelaml,  O.,  C?^^  ^^  2882. 
■*^^  o/fo-  date  d^ promise  to  pay  to 


Ipl  d^...   ^i«..«^. ^  OLLAES 

9^°  at  <^.../c4/.«..«/^««/  ae^.f^^4  '^a^,. 


Value  received. 
No.  125, 


^<i^Uy}^^<i-yi. 


-t,-: 


'Hwm 


70 


COMMKKCIAL    LAW    AND    BUSINESS    FORMS. 


Pii 


IV'* 


I     T  1 


151.    Form  No.  29. 
Blank  Indorsement. 


15!!8.   Form  No.  30. 

Full  Indoi'semenU 


^^.    S^  <§e/A. 


_ 


153.  A  General  Tiidorseiiient. — This  is  one  in  which  the 
name  of  the  indorsee  is  mentioned,  but  neither  the  word  order 
nor  hearer  is  used  in  connection  therewith. 

It  is  held  that  where  a  note  or  bill  was  originally  made  payable 
to  the  payee  or  order,  the  omission  of  order  or  hearer  in  the  in- 
dorsement does  not  restrain  its  negotiability,  and  therefore  a 
general  indorsement  is  in  effect  precisely  the  same  as  2Lfidl  in- 
dorsement, and  the  indorsee  has  a  right  to  insert  the  words  "  or 
order." 

154.  Qualitied  Indorsement.— An  indorsement  may  be 
so  qualified  that  it  will  relieve  the  indorser  from  all  liability  to 
pay,  while  at  the  same  time  it  transfers  the  title  perfectly  to  the 
indorsee,  and  gives  him  and  the  subsequent  holders  all  the  rights 
against  other  parties  which  would  be  secured  by  d^full  indorse- 
ment. This  is  generally  done  by  inserting  the  words  ^^  without 
recourse^''  in  the  imiorsement,  and  it  is  frequently  called  an  '^in- 
dorsement without  recourse.'^''  Any  other  words  might  be  used 
which  would  show  the  intent  of  the  indorser  to  only  transfer  his 
interest,  and  not  to  subject  himself  to  any  liability.  The  fol- 
lowing forms  will  illustrate  a  draft  with  the  general  and  quali- 
fied indorsements  following  it  made  on  the  hack. 


I  f  1 


M 


negotiable  paper. 

Form  No.  31. 

155.  Negotiable  Draft. 


VI 


Sv>o 


$1200'\  Buffalo,  N.  Y.,    di<^€.  ^o,   1882. 

CJe^  ^izyd  'cU^e^   ^t'^-d/ pay   to    the    order   of 


■J 


g^o  @^  ©f'^^.^^l., £..A....j:.±zCUl/::.±l.t£.. 


Q 


0W0 


qHq  ^-^^^-2^  ^i^^-cA^i/.. DOLLARS 

at  ^-(.'^^  SS-ui^A^  and  charge  to  account  of 

To  ^.  Cy^j^A^  S^ 
No.  753. 


J^e<i't-^^ 


J^<i-a<Z'^. 


■^^€1'^. 


150.   Form  No.  32. 

Gerieral  Indorsement. 


157.   Form  No.  33. 

Qualified  Indorsement. 


■t-i^ 


4.e<xxU'i.de: 


■a^t 


<^.  <^.  jfe^//. 


158.  Conditional  Indorsement.— A  conditional  indorse- 
ment may  be  upon  a  condition  precedent  or  a  condition  subse- 
quent. If  it  be  upon  a  condition  precedent  that  shall  give  it 
validity,  if  the  event  happens,  the  title  is  absolute.  If  a  condi- 
tion subsequent  is  to  make  it  void,  then  upon  the  occurrence  of 


f 


72 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


the  event  the  title  is  void.  Neither  the  original  character  of  the 
note  nor  its  negotiability  is  affected  by  a  conditional  indorse- 
ment.     It  only  affects  the  title  of  tlie  indorsee. 

1.10.  Rostrietive  Indorseinont.— A  restrictive  indorse- 
ment is  intended  to  confine  the  payment  to  some  particular 
person,  so  that  he  cannot  transfer  it  if  he  would. 

The  mere  omission  of  the  word  order  or  bearer  does  not  restrict 
its  negotiability.  It  should  be  remembered  that  the  omission  of 
"  order,"  or  **  bearer,"  in  an  indorsement,  on  the  back  of  a  note, 
or  draft,  does  not  have  the  same  effect  as  the  omission  of  the 
same  words  in  the  face  of  the  note  or  draft.  If  omitted  in  the 
face  the  bill  cannot  be  negotiated;  but  the  omission  in  the  in- 
dorsement still  leaves  it  negotiable,  provided  the  bill  in  the  first 
instance  were  written  in  such  a  manner  as  to  make  it  transfera- 
ble, but  if  not  so  made,  no  indorsement  will  make  it  so.  It  must 
contain  some  word  or  words  which  clearly  indicates  the  intention 
to  restrict.  Each  of  these  indorsements  is  supposed  to  be  made 
upon  the  back  of  the  same  draft,  to  illustrate  different  methods 
of  transferring  it.  It  would  be  well  to  write  up  paper  and 
make  the  indorsements.  The  following  forms  will  illustrate 
a  bank  draft  with  the  conditional  and  restrictive  indorsements 
on  the  back: 

1  OO.    Form  No.  34.         (Bank  Draft.) 


FIRST  NATIONAL  BANK   OF  DETROIT. 
Xo.  06.  Detroit,  Mich.,  0^i«^  y.    1882. 

The  ?ourtIt  Btationaf  Hanft 

Pay  to  the  order  oj^^ed't-^e.  IzJ/<i^-td 

C?i^'/f4^^ /^.^^  ^20  „ D OLLAES 

/^         ^  1  ()  ()  j„  current  Fundi. 

Cnnhf'er 


"^'^'^iW* 


if 


NEGOTIABLE    PAPER.  73 

161.   Form  No.  35.  16«.   Form  No.  36. 

Condliional  Indoraeinent.  Restrictive  Indorsement. 


If 

4  til 


163.  Indorsement  Before  Maturity. — Negotiable  pape^ 

is  transferable  by  indorsement  any  time  either  before  or  after 
maturity  up  to  the  time  of  payment.  But,  as  has  already  been 
explained,  it  makes  a  material  difference  to  the  holder  whether 
he  receives  it  before  or  after  maturitv.  If  he  receive  it  for  a 
valuable  consideration  before  maturitv,  he  takes  it  free  from  all 
equities  between  the  original  parties  of  which  he  has  no  knowl- 
edge. He  takes  the  bill  upon  its  credit,  and  is  under  no  obliga- 
tion to  inquire  into  equities  and  defenses,  and  so  if  he  receive 
a  bill  that  was  stolen  or  lost,  or  fraudulently  obtained,  his  title 
is  good.  It  is  not  subject  to  any  set-off  which  might  have 
existed  if  it  had  remained  in  the  hands  of  the  original  payee 
until  maturity. 

164.  Indorsement   After   Maturity. — If,  as   explained 

under  transfer,  the  paper  is  not  indorsed  by  the  original  payee 
until  after  maturity,  then  the  whole  thing  is  changed,  and  the 
indorsee  takes  it  subject  to  all  the  objections  that  would  have 
existed  against  it  in  the  hands  of  the  payee.  The  mere  fact 
of  its  remaining  unpaid  after  maturity  in  the  hands  of  the 
original    holder    is    presumptive    evidence     of     something     wrong. 


'WPI 


I 


74 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


He  Will,  however,  be  entitled  to  the  same  riglits  as  was  the  in- 
dorser  from  whom  he  received  it.  If  it  were  Issued  as  accommo- 
dation  paper,  the  indorsement  after  maturity  will  not  remoN  e 
the  objection  of  want  of  consideration.  But  if  it  had  first  been 
negotiated  before  maturity,  then  it  might  have  been  indorsed 
after  maturity,  and  each  indorsee  would  be  equally  protected 
with  the  first.  If,  however,  a  person  take  a  note  or  bill,  even 
before  due,  under  suspicious  circumstances,  relating  to  equities 
It  will  be  subject  to  those  equities.  ' 

1  «.">.    Indorsement  Revoeable.— The  mere  indorsement  of 
a  bill  does  not  transfer  the  title.     It  must  also  be  delivered  to 
the  mdorsee,  or  his  agent,  before  the  title  i)asses  to  him      An  ' 
indorsement  may  therefore  be  withdrawn  or  revoked  any  time 
before  delivery. 

106.    Indorsements  Admissible.-We  have  already  seen 
aiat  when  a  bill  is  payable  to  the  order  of  the  pavee  it  canno^ 
be  negotiated  without  an  indorsement.     But  when  a  bill  is  pay- 
able  to  bearer  it  may  be  transferred  by  delivery  alone.     It  'is 
admissible,  however,  to  indorse  a  note  or  bill  which  is  payable  to 
bearer,  or  which  is  indorsed  in  blank,  and  in  case  such  bill  is  in- 
dorsed, the  indorser  becomes  liable  for  the  payment,  provided  it 
is  not  paid  at  maturity.     The   same   bill  may  be  indorsed  any 
number  of  times  unless  it  contains  a  restrictive  indorsement      A 
bill  which  has  been  indorsed  by  a  person,  may,  in  the  course  of 
business,  come  back  to  him  again  by  indorsement,  in  which  case 
he  will  acquire  the  same  rights  he  had  in  the  bill  before. 

If  the  first  indorsement  remains  blank,  subsequent*  indorse- 
ments  will  not  affect  it,  and  any  holder  has  a  right  to  fill  up  the 
blank  indorsement  and  make  it  payable  to  his^own  order,  and 
pass  over  all  the  subsequent  indorsements, 

ler.  Necessity  of  Protesting.-Everv  indorser  whose 
name  appears  on  the  back  of  a  note  or  bill  is  liable  to  the 
holder  for  payment,  if  it  is  dishonored;  provided  it  is  duly  pro- 
tested,  and  proper  notice  given  to  each  of  them.  If  the  holder 
neglects  to  have  it  protested,  all  the  indorsers  will  be  dis- 
charged.      And  it  is  as  essential  that  a  bill  be  protested  for 


J^^- 


NEGOTIABLE    PAPER. 


75 


non-acceptance  as  it  is  for  non-payment.  Each  indorser  is  liable 
to  every  subsequent  indorsee,  and  may  look  to  every  antecedent 
indorser  for  indemnity.  But  the  security  of  the  holder  depends 
entirely  upon  havhig  the  protest  made  immediately  upon  the 
dishonor.  An  important  distinction  is  made,  however,  between 
foreign  and  inland  bills.  The  English  law  requires  Wi^l  foreign 
bills  shall  be  protested  for  non-acceptance,  while  inland  bills 
need  not  be,  and  this  law  will  generally  prevail  unless  there  is 
some  statute  law  which  interferes  with  it.  But  it  is  customary 
to  have  all  bills  protested  when  dishonored,  and  it  is  obviously 
the  safer  way. 

168.  Written  or  Verbal  Notice.— As  soon  as  a  note  or 
bill  is  protested  notice  must  be  sent  to  all  the  parties  whom  the 
holder  intends  to  look  to  for  payment.  He  may  select  one  or 
more  whom  he  considers  responsible,  and  notify  him  only,  or 
he  may  notify  all.  Each  indorser  should,  in  like  manner,  upon 
receiving  notice  from  the  holder,  notify  those  to  whom  he  in- 
tends to  look  for  indemnity,  and  each  has  until  the  next  day, 
after  receiving  notice,  to  send.  If,  however,  the  indorser  knows 
that  the  holder  sent  notice  to  all  the  parties  to  whom  he  would 
be  entitled  to  look  for  indemnity,  he  may  avail  himself  of  such 
notice,  and  need  not  himself  notify.  It  is  optional  with  the  per- 
son who  sends  the  notice  whether  it  be  written  or  verbal. 

169.  Kind  of  Notice.— The  notice  must  be  sent  by  the 
bolder,  or  by  an  agent  of  his— a  notary  public  would  be  his 
agent— and  not  by  a  stranger,  who  has  no  interest  in  the  matter. 

No  particular  form  of  notice  is  necessary;  it  is  a  sufiicient 
notice  to  say  that  the  bill,  or  note,  has  been  dishonored.  The 
notice  should  describe  the  paper  accurately  enough  so  that  there 
can  be  no  mistake  about  it.  It  should  also  state  that  the  person 
a.l.lressed  will  be  looked  to  for  payment.  A  person,  who  is  not 
the  holder  at  the  time,  may  give  notice  if  he  expects  the  paper 
to  come  into  his  possession,  as  where  he  has  given  it  as  collateral 
security  for  a  loan.  As  soon  as  the  proper  notice  is  given  to  the 
parties  who  were  conditionally  liable,  they  become  absolutely 
hable.  AVhen  notice  is  sent  by  mail,  it  must  be  put  in  the  post- 
office  as  soon  as  the  day  following  the  protest,  and,  in  case  there 


i*f 


*4l 


-m 


76 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


1 


il 


I 


is  delay  in  delivering,  the  sender  should  be  able  to  prove  that  it 
was  deposited  in  the  office  in  time. 

170.  Liable  Without  Notice.— When  the  drawer  of  a 
bill  unites  with  an  indorser  in  deceiving  a  holder,  by  represent- 
ing that  the  bill  will  be  accepted  when  they  know  it  will  not  be, 
they  are  not  entitled  to  any  notice.  And  when  an  indorser 
transfers  a  bill  upon  which  he  knows  there  is  nothing  due,  he 
need  not  be  notified.  When  a  person  draws  a  check  knowing 
that  he  has  no  money  in  bank  to  meet  it,  and  does  not  expect  to 
deposit  any  in  time  to  meet  it,  he  is  liable  without  notice. 
And  when  a  person  has  made  an  agreement  to  waive  notice,  it 
is  not  necessary. 

171.  Days  of  Grace. — The  days  of  grace  constitute  an 
important  consideration  in  the  computation  of  time  in  negotiable 
paper.     They  were  at  first  allowed  as  an  indulgence  to  the  maker 
of  the  note,  or  acceptor  of  the  bill,  to  enable  him  to  get  together 
the  necessary  money  for  payment.     In  time  it  became  an  estab- 
lished   custom    with  merchants  to  allow  a  certain   number  of 
days  for  this  purpose,   and  eventually  the  custom  became  law. 
Days  of  grace  are  not  uniform  in  number  in  different  countries. 
The  rule  of  law  is  that  they  are  governed  by  the  law  of  the  place 
where  the  paper  is  payable.     In  this  country  the  days  of  grace 
are  three^  which  are  added  to  the  time  at  which  the  paper  would 
otherwise  become  due.     If  a  note,  for  instance,  without  allowint^* 
"days  of  grace,"  should  become  due  on  the  first  of  June,  it 
would  not  be  payable  in  consequence  of  days  of  grace  until  the 
fourth  day  of  June.     If  the  third  day  of  grace  should  chance 
to  fall  upon  Sunday,  then  the  paper  is  due  one  day  earlier,  and 
would  be  payable  on  Saturday.     And,  if  it  should  so  happen  that 
this  Saturday  should  be  a  legal  holiday,  as  Christmas  or  the 
Fourth  of  July,  then  the  paper  would  be  due  and  payable  still  one 
day  earlier,  or  on  the  first  day  of  grace,  which,  in  that  case,  would 
be     Friday.      The    statute    of    New-York     makes     Monday     a    lejral 
holiday    when    such    holiday    falls    on    Sunday.      These    three    days 
are    to    be    counted    consecutively ;    that    is,    if    the    first    day    of 
grace    comes    on    Saturday,    the    Oiird    will    come    on    Monday,    no 
allowance    bein^r    made    for    Sunday.    Days    of  grace    are    added    in 


R^ 


NEGOTIABLE    PAPER. 


77 


all  cases  where  negotiable  paper  has  any  time  to  run.  They  are 
also  allowable  in  ^o;^.6  States  where  paper  is  payable  at  sight, 
but  in  other  States  they  are  not  allowed  on  sight  paper.  They 
are  not  allowed  on  paper  payable  at  sight  in  the  State  of  New- 
York,  nor  on  time  drafts  drawn  upon  banks  and  bankincr 
associations.  In  Canada  days  of  grace  are  allowed  on  paper 
payable  at  sight,  but  not  on  paper  payable  on  demand.  And  if 
the  last  day  of  grace  fall  on  Sunday,  or  a  legal  holiday,  the 
paper  is  payable  the  day  after  instead  of  the  preceding  day. 

Days  of  grace  have  been  abolished  altogether  in  California 
They  are  not  allowed  in  Kentucky,  Georgia,  and  Alabama  on 
promissory  notes,  unless  they  are  pavable  at  a  bank,  or  are  dis- 
counted or  left  for  collection  at  a  bank  or  private  banker's. 
Thus  It  becomes  necessary  for  one  doing  business  with  a  person 
living  in  another  State,  to  ascertain  what  the  statute  laws  are  in 
such  State  in  regard  to  any  contract  which  he  may  make. 

im.  Maturity  of  Negotiable  Paper.— By  maturity  is 

meant  the  day  upon  which  it  falls  due,  and  upon  which  demand 
of  payment  should  be  made.     This  depends  upon  the  method  of 
computing  time,  and  the  consideration  of  days  of  grace.     The 
day  upon  which  a  note  is  made  or  a  draft  is  accepted,  is  ex- 
cluded, and  the  time  counted /mm  that  day.     If,  for  example,  a 
note  18  dated  on  th^  first  day  of  any  month,  and  is  made  payable 
one  month  after  date,  it  would  fall  due  on  the  first  day  of  the 
following  month,  without  days  of  grace,  instead  of  the  last  day 
of  the  month  in  which  it  was  given;  but  with  the  days  of  grace 
It  does  not  fall  due  until  the  fourth  day  of  the  following  month. 
The  days  of   grace  are  considered  a  part  of  the  original  time, 
and  when  a  note  is  made  payable  one  month  after  date  it  means 
a  month  and  three  days.     So,  when  the  time  expressed  is  thirty 
days.  It  means  thirty-three.     It  must  be  remembered  also  that 
thirty  days  and  a  month  are  7iot  equivalent  terms.     In  the  com- 
putation of  time  in  negotiable  paper  a  month  means  a  calendar 
putation    of  time    in    negotiable    paper    a  month    means    a    calendar 
month    and  not  a  lunar  month.    So  when  a  note  is  dated  on  the 
last    day    of  any    month,    and    is    made    payable    one    month    after 
date,  it  will   be  due  on  the  last  day  of  the  next    month   if  there 
are    no   days   of  grace,    even    if  the  next  month  does  not  contain 
as    many    days   as    the    month    in    which    the    note    is    dated.     To 


i 


78 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


H' 


it  t' 


illustrate:  siip})Osc  four  notes  are  given  in  the  month  of  Janu- 
ary—  except  a  leap  year — each  note  made  payable  one  tnoydJi 
after  date— the. A>a'^  being  dated  28th;  second^  29th;  third,  30th; 
and  fourth,  on  the  31st  of  January  —  each  of  these  four  notes 
will  fall  due  on  the  third  day  of  March. 

173.  rresentatiou   for   Payineiit.— This  is  one  of  the 

most  important  duties  of  the  holder.  The  note  or  bill  should  be 
presented  on  the  exact  day  of  maturity,  and  demand  made  for 
payment.  If  the  holder  neglects  to  demand  payment  on  the 
very  day  it  falls  due,  he  will  lose  his  right  of  recovery  against 
all  the  parties  to  the  paper  who  are  conditionally  liable,  and  can 
only  look  to  those  who  were  absolutely  liable  The  maker  of  the 
note,  or  the  acceptor  of  the  draft,  will  still  be  liable  after  such 
neglect,  but  the  indorsers  and  the  drawer  will  be  discharged.  It 
is  of  no  account  to  present  the  paper  for  payment  any  day 
before  maturity,  or  any  day  after,  so  far  as  the  indorsers  are 
concerned;  they  are  al^solutely  free  from  liability,  unless  it  is 
presented  on  the  exact  day  of  maturity.  The  law  enforces 
promptness,  fidelity  and  exactness  in  the  presentation  and 
demand  of  payment  of  negotiable  paper.  Negligence  is  never 
tolerated, 

174.  Place  of  Presentment. — When  paper  is  made  paya- 
ble at  a  bank,  or  at  any  other  particular  })lace,  it  must  be  pre- 
sented at  that  place.  Wlieii  payable  at  a  bank,  it  is  a  sufficient 
presentation  to  leave  it  with  the  bank,  so  that  it  will  be  ready 
for  payment  and  delivery;  no  formal  demand  is  necessary  in 
such  case.  If  it  is  made  payable  generally,  that  is,  without 
specifying  any  particular  place,  then  it  is  necessary  to  j>resent  it 
either  at  the  place  of  business  or  residence  of  the  maker  or  ac- 
ceptor. If  the  maker  or  acceptor  has  changed  his  residence, 
diligent  inquiry  should  l)e  made,  and  if  his  present  residence  can 
be  ascertained,  presentment  should  be  made  there.  If  he  has 
absconded,  no  demand  is  necessary.  Where  after  diliirent  in- 
quiry  the  residence  cannot  be  ascertained,  presentment  should  be 
made  at  his  former  residence,  as  arrangements  may  have  been 
made  for  paying  it  there. 


NEGOTIABLE    PAPER.. 


79 


i7»l.  Protest  for  Non-Payment. — If  a  note  or  draft, 
when  properly  presented  for  payment,  is  dishonored,  it  should 
be  immediately  protested,  and  notice  should  be  sent  in  due  time 
to  all  the  indorsers,  and  to  the  drawer,  if  a  draft.  The  following 
note,  made  in  Chicago,  and  payable  at  Phoenix  National  Bank, 
Hartford,  Conn.,  had  been  transferred  by  indorsement,  as  ap- 
pears on  the  back.  It  was  protested  for  non-payment,  as  illus- 
trated on  the  following  page. 

176,   Form  No.  37.      (Negotiable  Note.) 


$2000'\  Chicago,  III,  Qc/.  ^d^  1881. 

On  theji^i^^^  day  of  ^c/ti^ei-^  A.  D.  1882,  without 
iV    '  y*"^^^  f^^  value  received  Cy  promise  to  pay  to  the  order 

'Jr/SSS^  of  ^■a.^'t^yie^.    C/lQ<ic-'A^t^o-<i<z.. 

(cC^tf  CyXaud-wi^i/... DOLLARS 

No.  102.  C^    §f,     &€^^^/l. 


177.   Form  No.  38. 


C/<zy,  /<iL  ^e^i^^y,  ^ 


/' 


SxA^^      ^<l€iA. 


ii 


^  is: 

'"-'li 


», 


HS 


80 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


178.   Form  No.  39. 

muitcd  MixUs  of  America. 

STATE  OF  CONNECTICUT,     / 

CITY  AND  COUNTY  OF    HARTFORD,  f  *** 

Se  it  linowu,  That  071  the  ^^ day  of  ^^«^^^  ,•„  the  year 
of  our  Lordom  thousand  eiyla  hundred  and  eighty-two,  at  the 
request  of  ^.   o4   &Ju^ce,    ^W«.,    d^   C#W.     C^^^ 
a  Notary  Public,  duly  comnnssiomd  and  sicorn,  residing  in  tile 
City  0/  Hartford,  aforesaid,  did  present  the  original  ■n<^e  here- 

unto  annexed  -^  c^d^^t-^  nJ/^y.'       y^      /        ,   . 

■t^  ^*tae*n.<t.  (^l/a-iux-tio^ cyja^^,  mul  demanded 

^a^w^^  thereof ,  which  was  refused. 

irhcmipon,  /,  the  said  Notary,  at  the  request  aforesaid  did 
mU,r  and  do  hereby  publicly^'and  solenLT^xIuZiatst 
the  Maker  and  endorsers  of  the  said  «c^,  and  all  others  con- 
cerned,for  all  exchange,  re-exchang,,  uU  costs,  damages,  and  in- 
terest,  ii^rred  or  to  be  incurred  for  want  of  A^.,^^^  of  the 
same.  '     /^ 

Aiid  T;  the  said  Kotaru,  do  hereby  cprt'tft,  thr.t  ^.    4i. 
diiu  I  dt^na^lu,?  o\.  fh^    ii  *  ^  '/*^'*^^y  \^pijy,  that  on  the  same 
aay  1  deposited  m  the  Post-ojffice  at  Hartford,  Conn,,  prepaid 

Notices   0/    I>rotest  of  said  ^4  addressed  as  follows f viz. : 

^<l/<n    ^r><i/l  C^^^  M^'i^'i^,     ^"^  yr^  ^.       ^  ^ 


^<^,.  <^mm^n^./4 


Noting  Protest,  -  $0.25 

Entering:,    -    -    -  -  .50 

R^ording,      -    .  -  .25 

Amxing-  Seal,    -  -  .25 

Notices,       -    -    -  -  1.00 

Travel, .50 

Postage.      -    -   -  «  .25 


5:hu.s^  gone  ma.  ^erotestrd,  in  the  City  of  Ilart^ 
Jord  ajortsatd,  and  ray  Notarial  Seal  affixed 
the  day  and  year  above  ^critten. 


^^. 


Notary  Public. 


83.00 


NEGOTIABLE    PAPER. 


81 


179.  Accommodation  Drafts.— Both  notes  and  drafts 
arp  used  as  accommodation  paper.  For  instance,  A.  wants  to 
borrow  money  of  B.,  and  B.  is  willing  to  accommodate  him,  but 
has  no  money  on  hand,  B.,  therefore,  draws  a  draft  on  II.,  who 
is  owing  him,  and  makes  it  payable  to  A.,  who  gives  no  value  for 
it.  This  draft  in  the  hands  of  A.  is  accommodation  paper,  and 
he  cannot  use  the  implied  contract  against  B.;  but  if  he  transfers 
it  for  money  to  a  bank,  or  an  individual,  it  then  becomes  business 
paper  in  the  hands  of  the  holder,  and  its  payment  may  be  en- 
forced. 

1 80.  Forged  Paper.— When  paper  is  transferred  before 
maturity,  the  endorsee  generally  obtains  a  perfect  title,  but  if 
the  name  of  the  payee,  or  the  first  indorser  is  forged,  the  holder 
has  no  title.  So  in  a  note,  if  the  signature  of  the  maker  is 
forged,  the  holder  can  have  no  right  against  him.  In  States 
which  have  a  statute  prohibiting  usury,  by  forfeiture  of  con- 
tract, the  holder  of  such  paper  can  neither  transfer  nor  enforce 
any  right.  Negotiable  paper  is  void,  either  when  the  considera- 
tion is  contrary  to  the  general  principles  of  common  law  or  is 
prohibited  by  statute. 

181.  Want  of  Consideration.— This  is  one  of  the  common 
defenses  interposed  to  the  payment  of  negotiable  paper.  Want 
of  consideration  is  a  good  defense  between  the  original  parties 
to  the  paper.  To  prove  that  it  is  accommodation  paper  is  a 
sufficient  defense  as  to  the  original  parties,  but,  after  it  has  been 
transferred  to  an  innocent  holder  for  value,  before  maturity,  it 
is  no  defense. 

1 82.  Stolen  or  Lost  Paper.— If  negotiable  paper,  which 
was  originally  payable  to  bearer,  or  is  indorsed  in  blank,  is 
stolen  or  lost,  it  cannot  be  collected  by  the  thief  or  finder, 
but,  if  it  is  transferred,  the  holder  who  receives  it  for  value 
before  maturity  in  good  faith,  can  hold  it  against  the  claims  of 
the  owner  at  the  time  it  was  lost.  The  loser  may  protect  his 
interest  in  a  measure  by  giving  notice  of  the  loss  to  the  maker, 
or  acceptor,  and  indorsers,  and  advertising  it  in  the  newspapers! 
A  lost  note  cannot  be  collected  without  givino-  indemnitv. 


nr. 


82 


COMMERCIAL   LAW    AND    BUSINESS   FORMS. 


1 


183.  Rights  Before  Maturity.— The  holder  of  paper 
has  sometimes  the  right  to  demand  payment  before  maturity. 
When  a  draft  has  been  protested  for  non-acceptance,  and  the 
proper  notices  have  been  served,  the  holder  may  proceed  at  once 
against  the  indorsers  and  the  drawer. 

ISl.    Laws   of    the    State.— Inasmuch    as    the    different 
States  have  different  laws  in  regard  to  the  came  thing,  it  is 
important  to  know  whether  a  contract  is  to  be  governed  by  the 
laws  of  the  State  where  it  is  made,  or  where  it  is  to  be  per- 
formed.    If  a  note  or  draft  is  to  be  performed— that  is  paid— in 
the  State  where  it  is  made,  then,  of  course,  it  will  be  governed 
by  the  laws  of  that  State.     But  when  a  note  or  draft,  or  any 
other  negotiable  paper  is  to  be  paid  in  another  State  than  that 
in  which  it  is  made,  it  will  be  governed  by  the  laws  of  the  State 
where  it  is  payable.     For  instance,  a  note  made  payable  "  with 
interest "  in  a  State  where  the  legal  interest  is  eight  per  cent., 
but  made  payable  in  New-York,  where  the  legal  interest  is  only 
six  per  cent.,  will  be  governed  by  the  laws  of  New- York.     It 
is  a  rule  in  law  that  a  contract  which  is  not  valid  in  the  State 
whero  it  is  made,  is  not  valid  in  any  other  State;  but  one  which 
is  valid  in  the  State  w^here  made  is  valid  in  any  other.     If  a 
note  be  void  in  the  State  where  made  by  reason  of  the  usury 
law,    it  has  been  held  that  it  cannot  be  enforced  in  a  State 
where,  if  it  had  there  been  made,  it  would  be  good.     Marriage 
contracts,  if  valid  where  they  are  made,  are  valid  everywhere. 
If  a  contract  is  made  w^hich  relates  to  personal  property,  it  is 
governed  by  the  law  of  the  place  where  made.     But,  if  it  is  in 
relation  to  real  estate,  it  is  governed  by  the  law  of  the  place 
where  the  land  is  situated. 

185.  Collateral  Security. — It  is  frequently  the  case  that 
negotiable  paper  is  pledged  as  security  for  the  payment  of  a 
loan  or  debt.  If,  while  this  paper  is  held  as  collateral  security 
by  a  bank,  the  paper  should  become  due,  and  the  bank  should 
fail  to  demand  payment,  and  have  it  properly  protested  in  case 
it  is  dishonored,  the  bank  will  be  liable  to  the  owner  for  the 
amount  of  the  paper. 


NEGOTIAIiLE    PAPER. 


83 


1  86.  In  Payment  of  Debt.— A  question  of  much  import- 
ance  frequently  arises  when  paper  is  transferred  by  a  debtor  to  a 
creditor  to  be  applied  on  account,  as  to  whether  it  is  to  be  con- 
sidered as  payment  of  so  much  of  the  account,  or  as  only  a 
means  of  securing  payment.     It  is  generally  held  that  the  mere 
transfer  of  the  paper  does  not  operate  to  extinguish  the  debt, 
but  it  suspends  any  action  for  the  collection  of  the  debt  until  the^ 
paper  falls  due.     The  creditor  takes  upon  himself  the  responsi- 
bility of  presenting  the  paper  for  payment  at  maturity,   and 
taking  all  the  requisite  steps  for  fixing  the  liability  of  the  parties 
by  properly  protesting  and  sending  notices.     In  a  few  States  the 
Statute  provides  that  the  transfer  shall  be  taken  as  prima  facie 
evidence  of  payment. 

In  the  State  of  New- York,  w^hen  paper  is  transferred  on 
account  of  debt,  it  is  held  that  it  does  not  operate  as  payment 
unless  by  agreement  between  the  parties  to  that  effect.  But 
where  it  is  transferred  at  the  time  the  debt  is  contracted,  it  is 
l)resumed  to  be  taken  in  payment. 

When  paper  is  transferred  on  account  of  debt  a  receipt  is 
often  given  for  the  paper,  and  it  will  depend  much  upon  the 
wording  of  the  receipt  whether  it  will  operate  as  payment  or 
not.  To  illustrate,  the  two  following  receipts  are  given:  By 
i\\Q  first,  Form  No.  40,  the  transfer  w^ould  operate  as  payment; 
by  the  second,  Form  No.  41,  it  would  not,  except  in  States 
having  a  statute  making  it  payment; 


187.    Form  No.  40. 


(Receipt.) 


/• 


Buffalo,  JSr.  Y.,jfuA^  <fd4  1882, 

Received  of^^A^  (^f<i/I^^^  @4^^^^c^^^^  ^ 

note  of. 

cyit^   i^wT^t/ie^/.. _ DOLLARiS 

inpayment  of  said  ^^iz-Me^  i  account. 


$500'\ 


'Ui^i 


^. 


4 


84 


COMMKRCIAL    LAW    AND    BUSINESS    FORMS. 


188.   Form  No.  41. 


(Receipt.) 


Buffalo,  N.    Y.,J^<a^  ^^    1882. 
Received  of   Si^^'u'ud,     (^f<i^/ie.4.^    on    account, 

^-cunue-c    cAQ■t€L'Ui■■i^  d    note  of „ 

U/'f^u^  ti^^'U'yit/^ei/ - DOLL.ARS 


$500'\ 


i^i-a^^d 


189.  Bank  Notes. — All  bank  notes  are  negotiable  paper, 
and  differ  from  other  negotiable  paper  principally  in  being 
always  payable  to  bearer.  These  notes  are  called  money,  and 
are  accepted  as  money,  because  they  are  authorized  by  legisla- 
tion, and  secured  by  Government  bonds.  They  are  always 
transferable  by  delivery. 

190.  Bank  of  North  America. — This  was  the  first  bank 
orcranized  in  the  United  States,  and  was  established  in  Philadel- 
phia,  in  1781,  under  the  auspices  of  Mr.  Morris,  Superintendent 
of  Finance,  and  a  delegate  to  the  Continental  Congress.  At 
that  time  the  finances  and  credit,  both  of  the  States  and  of  the 
Continental  Congress,  were  almost  entirely  exhausted,  and,  in 
order  to  procure  supplies  for  tlie  support  of  the  army,  Congress, 
and  several  of  the  State  governments,  had  been  obliged  to  have 
recourse  to  the  issuing  of  bills  of  credit,  which  was  the  princi- 
pal circulating  medium. 

191.  Continental  Money. — In  1775,  soon  after  the  battle 
of  Lexington,  Congress  made  provision  to  issue  Continental 
paper  to  circulate  as  money,  and  put  in  circulation  two  million 
dollars,  which  was  increased  from  month  to  month  until  it 
reached  two  hundred  and  fifty  millions.  This  money  constantly 
decreased  in  value  until  eventually  it  became  entirely  worthless, 
although  the  laws  at  that  time  made  it  a  legal  tender  for  private 
debts. 


NEGOTIABLE    PAPER. 


85 


192.  State  Banks.— Until  the  National  banks  were  estab- 
lished the  currency  of  the  country  was  all  issued  by  the  State 
banks.  These  banks  were  regulated  by  laws  passed  by  the 
legislatures  of  the  several  States,  and  in  many  States  the  secu- 
rity for  the  redemption  of  the  bills  was  so  unsatisfactory  and 
uncertain,  that  they  could  not  be  passed  outside  of  the  State  in 
wliich  they  were  issued  except  at  a  large  discount.  The  Legis- 
lature of  the  State  of  New- York  passed  a  general  banking  law, 
in  1838,  requiring  each  bank  issuing  currency  to  file  with  the 
proper  ofiicer  of  the  State  securities  equal  in  amount  to  the 
notes  issued.  These  securities  were  to  consist  of  bonds  of  the 
States,  or  mortgages  on  real  estate  situated  within  the  State, 
worth,  at  least,  double  the  amount  for  which  they  Avere  mort- 
gaged. But  these  mortgages  could  not  exceed  one-half  of  the 
whole  amount  of  securities  required.  The  banking  system 
of  New- York  was  considered  as  sound  as  any  then  in  existence. 

193.  National  Banks.— The  "National  Currency  Bank 
Bill "  was  passed  by  Congress,  and  approved  by  President  Lin- 
coln, February  25,  1863.  The  first  National  Bank  currency  was 
issued  about  January,  1864.  By  the  ''  National  Currency  Act  " 
the  Government  guarantees  the  currency,  and  requires  it  to  be 
secured  by  gold-bearing  bonds  of  the  United  States,  which  must 
be  deposited  with  the  Treasurer  of  the  United  States.  In  order 
to  make  the  redemption  of  the  National  Bank  notes  perfectly 
secure,  each  bank  is  obliged  to  deposit  one  hundred  dollars  in 
bonds  for  every  ninety  dollars  of  its  own  notes  issued,  and  each 
bank  is  required  to  redeem  its  own  notes  in  lawful  money  on 
demand.  The  law  makes  them  a  legal  tender  for  all  taxes  and 
other  dues  to  the  Government,  except  customs,  and  for  all  sal- 
aries and  other  dues  owing  by  the  Government  within  the  United 
States,  except  the  principal  and  interest  of  the  funded  debt.  It 
also  makes  them  receivable  by  each  national  bank  for  all  ordi- 
nary debts  due  them.  Each  bank,  designated  as  a  depository, 
is  also  required  to  receive  any  national  bank  bills  on  deposit 
from  all  public  officers. 

The  effect  of  these  provisions  is  to  make  the  notes  of  these 
banks  a  truly  national  currency  perfectly  good  all  over  the 
United  States.     National  bank  bills,  however,  are  not  legal  ten- 


•  r 

-t 


I 


86 


COMMKKriAL    LAW    AND    BUSINESS    FORMS. 


der  as  between  individuals,  for  individual  indebtedness,  and  need 
not  be  accepted  for  such  debts,  but,  if  accepted,  the  effect  of 
the  acceptance  is  to  make  the  payment  legal.  They  are  so  per- 
fectly secured  that  they  are  almost  universally  accepted  in  the 
payment  of  all  claims.  The  following  forms  will  illustrate  the 
wording  of  a  national  bank  bill  on  its  face  and  back: 

191.   Form  No.  42.         (Face  of  Bill.) 


TliU  note  is  secured  hy  bonds  of 

THE    UNITED    STJ^TES, 

Deposited  with  the  Treasurer  at  }yas/ungto7i. 

THE  FIFTH  NATIONAL   BANK,  OF  THE  CITY  OF  NEW-YORK, 

will  pi  fi/  the  bearer  o?i  demand 

FI'VE       3D  O  X.  Hi  ^A.  I^  S - 


CO 


^■.  (^f^^^  Cashier. 


.  J2m^ 


7^ 


Premie  nt. 


195.    Form  No.  43.        (Back  of  Bill.) 


This  note  is  receivable  at  par  in  all  parts  of  the  United 

States  in  payment  of  all  taxes  a7id  excise  and  all  other 

dues  of  the  United  States,  except  duties  on  imports,  and  also 

for  all  salaries  and  other  debts  and  demands  owing  by  the 

United  States  to  individuals,  corporations,  and  associations 

icithin  the  United  States,  except  interest  on  public  debt. 


196.  Legal  Tender  Notes.— The  coinage  of  money  and 
the  regulation  of  its  value  is  under  the  control  of  the  govern- 
ment of  the  country  where  it  is  used.  Congress  has  power  to 
regulate  the  value  and  uses  of  money,  and  to  determine  what 

C5 


I 


I 


u 


NEGOTIABLK    PAPER. 


87 


kinds  of  money  shall  be  used  as  legal  tender.  By  legal  tender  is 
meant  that  kind  of  money  which  may  be  required  by  law,  and 
which  may  be  offered  by  law  by  the  debtor  as  payment  of  a  debt. 
Gold  or  silver  coin — except  trade  dollars — is  a  legal  tender,  so, 
also,  are  United  States  Treasury  Notes  within  the  United  States. 
These  notes  are  known  as,  and  commonly  called,  "  greenbacks.'^'* 
The  first  lesfal  tender  notes  were  issued  bearing:  date  March  10, 
1862.  The  following  forms  give  the  wording  on  the  face  and 
back: 

197.    Form  No.  44.     (Face  of  Treasury  Note.) 


y 


Q  ,'  © 

m 


This  note  is  legal  tender  for  Ten  Dollars. 

THE    UNITED   STA.TES 

\cill  pay  to  bearer 

■      TEN     DOLLARS. 

Washington,  D.    C. 
UJ^ITED   STATES  JSVTE-Francis  E.  Spinner. 


198.    Form  No.  45.     (Back  of  Treasury  Note.) 


2  his  note  is  a  legal  te^ider  at  its  face  value  for  all 
debts  public  and  private,  except  duties  on  imports  a7id 
interest  on  the  public  debt.  Counterfeiting  or  altering  this 
note,  or  passing  any  counterfeit  or  alteration  of  it,  or 
having  in  j)ossessio?i  any  false  or  counterfeit  plate  or  im- 
pressiofi  of  it,  or  any  paper  made  in  imitatioii  of  the  paper 
on  which  it  is  2yrinted,  is  felony,  and  is  punishable  by  $5000 
fi7ie,  or  fifteen  years'*  i)nprisonment  at  hard  labor,  or  both 


If 


199.  Letter  of  Credit. — A  letter  of  credit  is  a  commercial 
instrument  of  great  convenience,  and  is  very  generally  used  by 
persons  who  go  to  foreign  countries,  either  on  business  or  for 
pleasure.  It  enables  a  person  to  draw  funds,  as  may  be  neces- 
sary, from  banks  or  bankers  in  foreign  countries  where  he  may 
be,  instead  of  carrying  large  amounts  of  money  about  hi*; 
person.     He  thus  avoids  the  risk  of  losing  his  money,  and  the 


• 


88 


COMMERCIAL    LAW    AMD    BUSINESS    FORMS. 


1 


inconvenience  of  making  frequent  exchanges  when  traveling,  as 
he  is  paid  in  the  currency  of  the  country  where  he  j)re8ents  his 
letter  of  credit.  The  following  form  will  illustrate  a  common 
letter  of  credit.  The  banks  of  the  foreign  countries,  with  their 
location,  are  generally  named  on  the  third  page  of  the  letter, 
and  the  payments  are  entered  on  the  second  page: 

*^00.     Form  No.  46. 

THE   CITY    BANK. 

1[0rrign  JitWtv  of  ©r$itiJ^ 

No,  1305,  Buffalo,  jfuA^  ^y^  1882, 

Gentlemen: 

We  request  that  you  will  have  the  r/oodness  to  furnish 
Mr.  d/'ts<id.c^€.  ^<ui/e^<i^of  this  City,  whose  signature  is  at  foot, 
with  any  funds  he  may  require  to  the  extent  of 

EIGHTEEN  TUG  USAXD  ERANKS  IN  G  GLD 

against  his  Duplicate  Receipts  (one  of  which  you  will  forward 
to  us)  for  any  payment  made  under  this  credit. 

Whatever  sum  Mr,  ^^/^^ may  take  up, 

you  will  please  endorse  on  the  hack  of  this  letter,  which  is  to  con- 
tinue  in  force  until  July  1st,  1883,  a7id  charge  to  the  accotmt  of 

Your  obedient  servants^ 


The  Signature  of 


1^^ 


7 


President, 


To  Messieurs: 


The  Bankers  mentioned  on  the   third  page  of  this  Letter  of 
Credit, 


NEGOTIABLE    TAPER. 


89 


•201.  Inland  Letter  of  Credit.— There  are  both  foreign 
and  inland  letters  of  credit.  The  foregoing  letter  is  for  use  in 
foreign  countries  ;  the  two  following  forms  constitute  a  set  of 
inland  letters,  the  first  (No.  47)  of  which  is  delivered  to  the 
party  for  whom  it  is  drawn,  and  the  second  (No.  48)  is  sent 
by  the  bank  which  issues  them  to  the  bank  where  the  letter  is  to 
be  presented,  and  from  which  the  holder  intends  to  draw  money. 
These  forms  differ  somewhat  from  the  foreign  letters  in  word- 
ing, but  in  their  general  characteristics  they  are  the  same.  The 
blanks  are  given  just  as  they  were  printed  for  the  use  of  the 
bank,  and  may  be  copied  and  filled  up  by  any  who  would  like 
practice  in  these  forms.  The  three  letters  will  convey  a  clear 
idea  of  the  whole  matter. 

Form  No.  47. 

S0»2.  Inland  Letter  of  Credit. 

BANK  OF  COMMERCE  IN  BUFFALO. 


Buffalo, 1882, 


■ 


il 


7b- 


My  dear  Sir ' 

I  beg  to  introduce  to  your  courteous  attention 

Mr.^ of - 

and  to  request  that  you  will  open  in favor  a  credit  for 

„ drafts  against  which 


This  letter  of  credit  to  remain  in  force 7nonths  from 

date.      You  will  please  note  the  signature  of  the  bearer  which 
has  been  forwarded  to  you  under  separate  cover. 

Very  respectfully  yours, 


-a-l-^-a^y  Vice-President. 


90 


To 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 

Form  No.  48. 
2IKI.  Inland  Letter  of  Credit, 

BANK  OF  COMMERCE  IN  BUFFALO. 

^tfj^tiloy 1882. 


My  dear  Sir:  — " 

I  beg  to  advise  having  this  dag  issued  our  Letter^ 

of 'Credit  addressed  to  you  for 

in  favor  of  Mr 

drafts  against  which 


of 


and  to  request  due  honor  thereof  within  the  period  of 

montlis  from  date.      You  will  please  find  the  signature  of  the 
bearer  in  the  margin  hereof 

Very  respectfully  yours, 


Signature, 


\AcA/y. 


iX^ 


7 


Yice-  President. 
S04.  Bill  of  ladina:  as  Security.— Shipping  merchants 

frequently  purchase  cargoes  of  grain  on  speculation  to  be  for- 
warded to  an  agent  in  some  city  for  sale;  and  then,  to  obtain 
the  money  to  pay  for  it,  a  draft  is  drawn  upon  the  consignee  and 
made  payable  to  some  bank  from  which  the  money  is  obtained 
by  giving  as  security  for  the  discount  of  the  draft  a  Bill  of 
Lading  made  out  by  the  captain  of  the  vessel,  or  canal-boat, 
upon  which  it  is  shipped,  either  in  the  shipper's  name,  and  then* 
assigned  by  him  to  the  bank,  or  made  originally  in  the  name  of 
the  bank;  both  forms  are  used.  The  bill  of  lading  is  usually 
attached  to  the  draft,  and  is  held  by  the  bank,  and  the  title  in 
the  grain  passes  at  once  to  the  bank. 


NEGOTIABLE    TArER. 


91 


1^.      ^ 


M  -j 


c 


4^ 


92 


CUMMERCIAl.    LAW    A^D    BUSINESS    FORMS. 


ir 


^/ 


^ 


200.  Ownership.— The  grain  is  then  subject  to  the  direc- 
tion and  control  of  the  bank,  and,  when  sold,  the  proceeds  must 
be  appropriated  to  the  payment  of  the  draft. 

The  following  draft  and  preceding  bill  of  lading  represent 
such  a  transaction,  in  which  J.  Boutwell  purchased  the  wheat 
and  shipped  it  on  board  the  canal  boat  John  Johnson;  whereof 
Henry  James  is  captain.  The  wheat  is  consigned  to  Andrew 
Johnson  &  Co.,  New-York  agents,  on  account  of  the  City  Bank. 
The  bank  also  requires  J.  Boutwell  to  secure  insurance  on  the 
wheat  for  the  interest  of  the  bank: 

1207.    Form  No.  50. 


$10,000'\ 


Buffalo,  y.   y.,  j^^^g  ^;r    1882. 


d  I  g      Pay  to  the   order  of  ^^  M^i^tA.. 


%^ o  CzJ^  (yA<iu^€i^€/.. DOLLARS 

jiSo    ^^'^^'^   received  and    charge   the  same    to   account   of 


Xo.  730.  cy^-tu^^/^^ 


^^ 


'^Ul€^^ 


*108.  Counterfeit  Bank  Bills.— A  payment  of  any  debt 
in  bank  bills  which  are  counterfeit  is  a  nullity.  It  has  no  effect 
whatever  upon  the  debt,  even  if  both  parties  at  the  time  sup- 
posed them  to  be  genuine. 

•200.  Debtor  and  Creditor.— xVny  contract  by  which  a 
certain  sum  of  money  becomes  due  to  any  jktsou,  and  is  not 
paid,  but  remains  in  action  merely,  is  a  contract  of  debt,  and  the 
parties  to  this  contract  are  called  debtor  and  creditor.  In  case 
of  a  sale  of  goods,  if  the  price  be  not  paid  in  ready  money,  the 
buyer  becomes  the  debtor,  and  the  seller  is  the  creditor. 

;ilO.  Duty  of  the  Debtor.— It  is  the  duty  of  the  debtor 
to  tender  payment  to  the  creditor  or  his  authorized  agent  at  the 
proper  time,  usually  before  demand  is  made,  or  action  is  brought 


4 


NEGOTIABLE    PAPER. 


93 


"T. 


to  recover,  but  when  it  is  a  note  or  bill  which  is  payable  on  a 
particular  day,  then  he  should  tender  payment  on  that  day,  in 
the  proper  manner  and  the  exact  amount.  A  part  of  the  cur- 
rency of  this  country  consists  of  bank  notes,  and  they  are  a 
good  tender  if  received  by  the  creditor,  or,  if  not  objected  to, 
and  are  received  as  money  and  receipted  for  as  money. 

^11.  Duty  of  the  Creditor.— When  the  debtor  pays  ac- 
cording to  the  terms  of  the  agreement,  or  in  accordance  with 
the  manner  marked  out  by  the  creditor,  the  creditor  should  give 
him  an  acquittance  of  the  debt.  And  where  the  debtor  and 
creditor  meet  and  balance  up  their  accounts,  by  deducting  from 
the  debt  some  demand  of  the  debtor  against  the  creditor,  it  is 
equivalent  to  a  payment  of  so  much  upon  the  debt.  And  where, 
by  agreement  between  the  parties,  other  property  is  taken  on 
the  debt,  it  will  operate  as  payment  to  that  extent,  but  if  there 
be  no  agreement  to  take  other  property,  then  the  tender  must  be 
made  in  mojiey.  A  tender  of  a  larger  sum  of  money  than  is 
due  is  legal,  provided  the  change  can  be  made  out  of  the  sura 
offered,  but  not  if  it  requires  the  creditor  to  make  change.  But 
if  the  debt  be  in  the  form  of  negotiable  paper,  although  it  is 
the  duty  of  the  debtor  to  pay  it,  it  will  not  be  safe  for  the  credi- 
tor to  wait;  he  must  go  to  the  debtor  and  demand  payment  if  he 
intend  to  look  to  the  drawer  or  indorsers. 

5J13.  General  Depositor. — A  general  depositor  in  a  bank 
which  becomes  insolvent  is  a  general  creditor,  and  is  not  entitled 
to  any  preference  over  other  creditors.  The  relation  between  a 
bank  and  a  depositor  is  the  ordinary  relation  of  debtor  and 
creditor,  but  there  is  an  additional  obligation  arising  from  cus- 
tom, that  the  bank  shall  honor  the  checks  of  the  depositor.  If 
money  is  allowed  to  remain  in  a  bank  without  any  change  by 
deposits  or  drafts,  and  there  is  no  interest  to  be  credited  upon 
it,  the  statute  of  limitations  will  bar  its  recovery  when  it  has 
run  its  full  time. 

t^ltt.  Oral. — Oral  means  spoken,  in  contra-distinction  to 
written,  as  oral  evidence,  which  is  evidence  delivered  verbally 
by  a  witness;  that  is, delivered  by  word  of  mouth. 


W 


94 


CUMMEKCIAL    LAW    AND    BU81>ESS    FuKA-S. 


NKGOTIABLK    PAPKR. 


95 


! 


' 


w 

m 


^14.  Parol. — This  is  a  term  used  to  distinguish  a<n*eements 
which  are  made  verbally,  or  in  writing,  not  under  seal,  which  are 
called  parol  contracts,  from  those  which  are  under  seal,  which 
bear  the  name  of  deeds  or  specialties.  Parol  evidence  is  evi- 
dence verbally  delivered  by  a  witness. 

^lo.  Receipt. — A  receipt  is  a  written  acknowledgment  of 
payment  of  money  or  delivery  of  chattels.  It  is  executed  bv 
the  person  to  whom  the  payment  or  delivery  is  made,  and  raaV 
be  used  as  evidence  against  him,  on  the  general  principle  whicii 
allows  the  admission  or  declaration  of  a  }>arty  to  be  given  in 
evidence  against  himself.  It  is  often  useful  as  a  voucher  in  the 
settlement  of  private  accounts.  It  is  pr una  facie  evidence,  but 
not  absolute.  A  receipt  "in  full"  of  a  specified  debt  is  con- 
sidered of  a  higher  and  more  conclusive  character  than  a  simple 
receipt.  If  a  receipt  embodies  a  contract  it  is  not  open  to  the 
explanation  permitted  in  a  simple  receipt.  No  one  has  a  right 
(unless  it  be  made  by  contract,  or  by  statute,  a  condition  prece- 
dent) to  demand  a  receipt  as  a  condition  of  payment. 

J^16.  Seals. — The  common  definition  of  a  seal  is  an  im- 
pression on  wax,  wafer,  or  some  other  tenacious  substance  capa- 
ble of  being  impressed,  or  a  plate  of  metal,  with  a  flat  surface, 
on  which  something  is  engraved,  and  with  which  an  impression 
is  made  on  wax,  or  some  other  substance,  on  paper  or  parch- 
ment, in  order  to  authenticate  them;  the  impression  thus  made 
is  called  a  seal.  When  a  seal  is  aflixed  to  an  instrument,  as  a 
deed,  mortgage,  or  protest,  it  makes  it  a  specialty.  In  some  of 
the  States  a  scroll  is  equally  effective.  The  seal  of  a  notary 
public  is  taken  judicial  notice  of  the  world  over.  What  is  a 
sufficient  seal  is  determined  by  local  law. 

217.  Specialty.— A  specialty  is  a  writing  sealed  and  de- 
livered, containing  some  agreement,  or  a  writing  sealed  and 
delivered,  which  is  given  as  a  security  for  the  payment  of  a 
debt,  in  which  such  debt  is  particularly  specified.  If  in  the 
body  of  the  writing  it  is  not  said  that  t^ie  parties  have  set  their 
hands  and  seals,  yet  if  the  document  be  really  sealed,  it  is  a 
specialty,  and  if  it  be  not  sealed  it  is  not  a  specialty. 


LEGAL  DECISIONS  IN  MISCELLANEOUS  CASES. 

21 8.  Impersonal  Payee.— The  following  check  was  drawn 
and  presented  for  payment,  which  was  refused: 

"St.  Paul,  Minn.,  Jan.  22,  1879. 

"Messrs.  Dawson  &  Co.,  Bankers: — Pay  to  the  order  of,  on 
sight,  two  hundred  dollars,  in  current  funds. 

"JONES  &  PECK." 

The  court  held  that  this  is  not  a  check.  It  must  have  a  name 
or  indicate  a  payee.  Checks  made  payable  to  "  cash  "  or  order, 
or  to  some  character,  or  number,  or  order,  are  held  to  be  payable 
to  bearer,  by  reason  of  the  use  of  "  or  order,"  which  words  indi- 
cate intention  to  mjtke  it  negotiable,  and,  when  an  impersonal 
payee  is  mentioned,  which  cannot  indorse,  it  is  presumed  to  be 
payable  to  the  bearer.  In  this  case  there  is  no  impersonal  payee 
mentioned,  nor  any  blank  space  left  for  the  payee's  name. 

219.  Promise  to  Accept  Draft. — A  non-resident  dealer 
wrote  to  a  broker  in  Alabama,  asking  the  prices  of  cotton,  and 
added:  "If  I  see  a  "margin  will  authorize  you  to  draw  for  cost." 
Upon  being  advised  of  cost,  he  telegraphed:  "Will  advance 
cost  if  you  buy  strict,  good  ordinary  at  sixteen."  Held  that  the 
two  together  constituted  an  unconditional  promise  to  accept, 
and,  under  the  statute  of  Alabama,  constitute  an  acceptance. 

220.  Check  Post-Dated.— A.  and  B.,  residents  of  New- 
York,  exchanged  their  checks  with  each  other,  and  each  agreed 
with  the  other  to  keep  his  account  good  at  the  bank,  to  meet 
his  check  at  maturity,  both  checks  being  post-dated.  It  was 
held  that  because  one  party  failed  to  keep  his  account  good 
was  no  defense  for  the  other  when  sued  by  a  bona  fide  holder  of 
his  check. 

221 .  Procuring  Signature  by  Fraud.— Suit  was  brought 
in  Indiana  against  the  maker  of  a  note  by  an  indorsee  who 
received  it  for  value  before  maturity.     The  defense  was:  that 


ill 


1-  '■   n 


I 


t 


06 


COMMKKCIAL    LAW    AM)    BUSINESS    FORMS. 


said  note  was  so  artfully  constructed  that  its  terms,  when  read 
properly,  contained  the  contract  for  a  patent  right  and  the  ter- 
ritory  thereof;    but  affiant  believes  it  contained  a  promissory 
note  secretly  and  artfully  concealed  therein,  which  note  couM 
only  be  constructed  by  mutilating,  cutting?,  and  trimmin-  and 
severing  said  note  out  of  said  contract;  that,  when  said  con- 
tract was  entire,  it  was  ex^ecuted  by  thi.s  defendant;  but  after  it 
was  so  executed,  and  delivered  in  such  form,  it  was  mutilated 
changed,  altered,  severed,  and  otherwise  trimmed  into  the  note 
sued   upon,   all   of    which   mutilation    was   done   without   the 
knowledge,  consent,  connivance,  or  instance,  and  request  of  this 
defendant;  wherefore,  defendant  says  that  such  pretended  note 
is  not  his  act  and  note,  and  was  never  executed  by  him  as  such 
m  manner  and  form  sued  upon."     Held,  that  the  maker  is  liable 
to  an   innocent  indorsee   who  received  it   before  maturity  for 
value,  to  the  amount  of  such  note. 

S5J-2.  Wrongful  Conversion  of  Note.-A  promissory  note 
after  maturity  was  placed  in  the  hands  of  an  a-ont  for  collec- 
tion, and  was  converted  by  him  to  his  own  use,\nd  was  after- 
wards  sold  under  an  execution  against  him.  It  was  held  that 
the  purchaser  did  not  acquire  any  interest  in  the  note,  and  could 
not  maintain  an  action  against  the  maker. 

^23.    Deceased  Maker  of  Xote.-If    the  principal   maker 
of  a  note  dies,  the  holder  is  not  bound  to  notify  a  surety  that 
the  note  is  not  paid,  before  the  settlement  of  the  maker's  estate 
neither  is  he  obliged  to  prove  the  note  against  the  estate. 

2^4.    Non-Xegotiable    \ote.— Where   a   note   was   made 
payable  for  a  certain  sum  named,  -  with  per  cent   in 

attorney's  commission,  if  collected  by  legal  process,"  it  was  held 
that  such  a  note  is  not  negotiable. 

•2-J5.   Immaterial   Alteration  of   \ote.-A  promissory 
note   was  made  payable   "  on  demand,  with  interest,"  and  was 
signed  by  R.  S.  D.  and   P.  Q.  D.     After  the  note   was  signed 
K.  S.  D.  wrote  below  the  names,  without  the  knowledcre  or  con- 
sent of   R  Q.  D.,  "Interest  on  the  above  note  to  be^nine  per 


% 


NEGOTIABLE    TAPEK. 


97 


cent.     R.  S.  D."     It  was  held  that  this  was  not  a  material  alter- 
ation of  the  note,  so  far  as  P.  Q.  D.  was  concerned. 

!!J586.  Accommodation  Paper. — If  a  person  makes  his  note 
payable  to  a  bank  for  the  accommodation  of  a  friend,  to  enable 
such  friend  to  raise  money  thereon,  without  restriction  or  limita- 
tion as  to  its  use,  he  is  liable  to  the  bank  on  its  advancins:  the 
money  and  the  appropriation  to  the  purpose  for  which  the  note 
was  given. 

^^7.  Official  Signature. — A  promissory  note  was  signed 
by  several  officers  of  a  church,  and  after  each  signature  was 
added  the  words,  "  Vestryman,  Trinity  Church."  It  was  held 
that  it  was  not  a  note  of  the  church  or  corporation,  but  of  the 
individuals  who  signed  it. 

328.  Gift  of  Notes. — A  short  time  before  his  death  C.  in- 
dorsed each  of  two  notes,  of  which  he  was  the  holder,  as  follows: 
"I  transfer  the  within  note  as  a  gift  to  Miss  Agnes  Morrison; " 
they  were  then  delivered  to  his  nephew,  with  direction  to  take 
care  of  them,  and  give  them  to  Miss  Morrison  after  his  death. 
C.  wrote  Miss  Morrison  stating  that  he  had  given  her  the  notes. 
It  was  held  that  the  title  to  the  notes  passed  to  the  assignee  as 
soon  as  they  were  assigned  and  delivered  to  the  nephew. 

"2*29,  Rate  of  Interest  After  Maturity.— A  note  was 
made  payable  "  one  day  after  date  with  interest  from  date  at 
the  rate  of  twelve  per  cent,  per  annum,  interest  to  be  paid  an- 
nually." It  was  held  that  the  note  would  draw  the  same  rate  of 
interest  after  maturity  until  paid. 

^30.  Consideration.— The  mere  fact  that  a  negotiable  note 
is  purchased  for  about  one-half  of  its  face  value,  there  beino-  no 
evidence  showing  it  to  be  worth  more  than  the  amount  paid,  and 
the  evidence  tending  to  show  that  the  purchaser  did  not  reo-ard 
the  note  as  easily  collectable,  it  was  held  is  not  sufficient  to  j^ut 
the  purchaser  on  inquiry  as  to  the  consideration  of  the  note. 

^31.  Conditional  Draft. — The  following  order  was  drawn 
upon  John  II.  Erck,  and  accepted  by  him.     He  was  not  owing 


08 


COMMKKCIAL    LAW    AND    BUSINESS    FORMS. 


NEGOTIABLE    PAPEU. 


99 


Randall  anything  when  it  was  drawn,  and   soon  after  the  ao 
ceptance  the  contract  was  abandoned  by  Randall,  and  nothing 
ever  became  due  on  the  contract: 

"John  H.  Erck,  Esq.  Omaha,  Neb.,  Feb.  9,  1877. 

".Se>,— Please  pay  George  H.  Hoagland,  or  order,  six  hundred 
and  thirty-five  dollars  out  of  amount  due  me  on  contract  for 
erection  of  your  store  building,  when  due. 

"  J.  B.  RANDALL, 

"Contractor." 

It  was  held  that  this  order  was  not  absolute,  but  was  to  be 
paid  only  when  the  amount  was  due  on  the  contract. 

•^U'J.  Note  at  Variaiuo  willi  Statute.— The  revised 
statutes  of  Indiana  provide  that  "Notes  payable  to  order  or 
bearer  in  a  bank  in  this  State,  shall  be  negotiable  as  inland  bills 
of  exchange,  and  the  payers  and  indorsers  thereof  may  recover 
as  in  case  of  such  bills."  The  holders  of  the  following  promis- 
sory note,  who  had  received  it  before  maturity  by  indorsement, 
brought  an  action  to  recover,  but  were  defeated  on  the  ground 
that  it  did  not  come  within  the  statutes: 

"Hope,  Ind.,  March  20,  1877. 

"  Four  months  after  date  we  promise  to  pay  James  B.  Drake 
or  order,  four  hundred  dollars,  and  five  per  cent,  thereon  for 
attorney's  fees,  value  redeived,  without  any  relief  whatever 
from  valuation  or  appraisement  laws,  negotiable  and  payable  at 
the  Indiana  Banking  Company  of  Indianapolis,  Indiana,  with 
ten  per  cent,  interest  until  paid. 

"HENRY  F.  ROMINGER, 
"MARY  E.  ROMINGER." 

The  foregoing  note  was  not  made  payable  at  an  office  or 
hanki7ig-ho%Lse  of  the  company,  and,  therefore,  held  that  the 
place  was  not  specified,  as  the  statute  requires. 

;d33.  Note  with  Illegal  Consideration. — Criminal  pro- 
ceedings were  commenced  against  a  man  for  obtaining  goods 


under  false  pretenses,  and  his  wife  gave  the  parties  from  whom 
the  goods  were  obtained  a  note,  signed  by  herself  and  husband, 
for  the  amount  of  the  goods  and  costs  made,  and  secured  the 
note  by  mortgage  on  her  real  estate,  the  consideration  for  which 
was,  that  they  should  procure  an  abandonment  of  the  prosecu- 
tion and  release  of  the  husband.  It  was  held  that  a  court  of 
equity  would  not  enforce  such  a  contract. 

934.  Diligence    in  Giving    Notice. — Proceedings  were 

commenced  against  an  indorser  of  a  promissory  note  in  Balti- 
more, where  the  note  was  made  and  dated^  and  wliere  the  in- 
dorser lived  and  continued  to  reside  for  some  time  afterward.  His 
sign  was  retained  at  his  place  of  business,  and  his  name  was 
still  in  the  city  directory.  In  the  certificate  of  protest  made 
out  by  the  notary  public,  he  inserted  the  words,  "  after  diligent 
search  and  inquiry  to  ascertain  his  whereabouts." 

It  was  held  that  these  words  contained  in  a  notarial  certificate 
of  protest  are  not  admissible  as  evidence  of  such  inquiry  and 
diligent  search  having  been  made,  and  that  the  notary  should 
have  treated  the  indorser  as  presumably  being  still  a  resident  of 
the  city. 

9:i5.  0])taining  Note  by  Fraud.— Suit  was  brought  in 

Pennsylvania  on  a  note  of  five  hundred  dollars.  Evidence  was 
offered  to  show  that  the  maker  of  the  note  went  to  a  bank  to 
receive  payment  on  a  certificate  of  deposit  for  five  hundred 
dollars,  and  that,  when  the  money  was  paid  to  him,  he  was 
requested  to  sign,  and  did  sign,  a  paper  which  was  represented 
by  the  bank  officers  to  be  a  receipt  for  five  hundred  dollars,  but 
it  turned  out  to  be  a  note  for  that  amount.  The  court  rejected 
the  evidence.  The  court  of  appeals  held  that  the  evidence 
should  have  been  admitted. 

936,  Joint  and  Several  Note.— An  action  was  brought 
on  a  note  containing  the  vvords,  "/promise  to  pay,"  and  signed 
by  two  persons  as  makers.     It  was  held  that  the  note  was  both 
joint  and  several. 

937.  Statute  of  Ohio.— The  Statute  of  Ohio  provides  that, 
when  a  note  or  other  negotiable  paper  is  given,  the  consideration 


.i'l 


100 


COMMER(  lAL    LWV    AND    BUSINESS    FURMS. 


C  !l 


for  which  consists  in  wliole  or  in  part  of  the  right  to  make,  use, 
or  vend,  any  patent  invention,  or  inventions  claimed  to  be  pa- 
tented, the  words,  "  given  for  a  patent  right^''  shall  be  promi- 
nently and  legibly  written  or  printed  on  the  face  of  such  note 
or  instrument  above  the  signature  thereto  ;  and  such  note  or  in- 
strument in  the  hands  of  any  purchaser  or  holder  shall  be 
subject  to  the  same  defenses  as  in  the  hands  of  the  original 
owner  or  holder.     Pennsylvania  has  a  similar  statute. 

!!2«t8.  Illdorseineut. — A  note  was  written  as  follows:  "I 
promise  to  pay  to  the  order  of  myself,"  and  was  signed  by  two 
persons,  "A.  B."  and  "  C.  D.,"  and  was  then  placed  by  C.  D. 
in  the  hands  of  A.  B.,  to  be  put  into  circulation  by  him  for  his 
own  benefit.  This  note  was  indorsed  by  "  A.  B."  and  negotiated 
before  maturity,  and  the  title  of  the  holder  was  held  to  be  good 
without  the  indorsement  of  "  C.  D." 

:2«i9.  Where  Bills  of  Exchange  are  Payable. — An  action 
was  brought  against  the  drawers  of  the  following  bill : 

^166^.  Charlotte,  X.  C,  Oct.  30,  1871. 

Thirty  days  after  date  pay  to  the  order  of  Wittkowski  tfc 
Rintel  one  hundred  and  sixty-six  and  -^^  dollars,  value  received, 
and  charge  to  account  of 

GENTRY  &  SMITH. 

To  S.  L.  Billings. 

This  draft  was  accepted  the  same  day  it  was  drawn.  It  was 
then  discounted  by  a  bank,  and  not  being  paid  at  maturity  was 
protested,  and  notices  were  sent  by  mail  addressed  to  the  draw- 
ers at  Gap  Civil,  in  Alleghany  County,  and  to  the  acceptor  at 
Sparta,  in  the  same  county,  in  N.  C.  It  was  from  information 
received  from  the  plaintiff  that  the  notices  were  so  sent.  It  was 
proved  that  Billings  lived  in  Grayson  County,  Va.  Held  that 
the  presentation  at  the  place  of  date  is  a  sufficient  demand  to 
hold  the  parties  after  notice  of  protest,  where  no  place  of  pay- 
ment is  stated  in  the  draft,  and  no  proof  is  made  that  any  par- 
ticular place  was  agreed  upon. 


ij 


% 


NEGOTIABLE    PAPER. 


101 


340.  Payment.— Payment  is  the  fulfillment  of  a  promise,  or 
the  performance  of  an  agreement.  It  is  the  discharge  in  money 
of  a  sum  due.  When  payment  is  pleaded  as  a  defense,  the 
defendant  must  prove  the  payment  of  money  or  something 
accepted  in  its  stead,  made  to  the  plaintiff  or  some  person 
authorized  in  his  behalf  to  receive  it.  Payment  is  doing  precise- 
ly what  the  payer  agreed  to  do.  That  the  payment  may  extinguish 
the  debt,  it  must  be  made  by  a  person  who  has  a  right  to  make  it, 
to  a  person  who  is  entitled  to  receive  it,  in  something  proper  to 
be  received,  both  as  to  kind  and  quality,  and  at  the  appointed 
place  and  time. 

241.  Evidence  of  Payment.— Evidence  that  anything  has 
been  done  and  accepted,  as  payment  is  evidence  of  payment.  A 
receipt  is  prima  facie  evidence  of  payment.  So  is  the  possession 
by  the  debtor  of  a  security  after  the  day  of  payment,  which 
security  is  usually  given  up  on  payment  of  the  debt.  A.'s  note 
payable  to  the  order  of  B.,  indorsed  by  him  and  cancelled,  or  in 
the  hands  of  A.,  in  prima  facie  evidence  of  a  payment  by  him  to 
B.  of  the  sum  mentioned  in  the  note. 

24a.  Filing  of  Papers.— There  can  be  nothing  of  greater 
importance  to  a  business  house  than  the  careful  filing  and  preser- 
vation of  all  papers  which  may  be  of  any  use  in  the  transac- 
tions of  the  business.  Many  times  they  are  of  the  utmost 
importance,  and  they  should  be  so  arranged  and  placed  that  they 
may  be  found  and  referred  to  at  once.  One  has  no  right  to 
waste  his  customer's  time,  or  his  own,  in  a  fruitless  search  for 
papers  which  were  not  properly  filed. 

243.  Copying  Letters.— Every  business  letter  that  is  re- 
ceived should  be  carefully  filed  and  preserved  for  future  refer- 
ence;  and  every  letter  of  any  importance  which  is  written 
should  be  copied  before  it  leaves  the  office  of  the  writer.  Copv- 
ing  presses  and  other  conveniences  for  copying  letters  can  easily 
be  obtained  from  nearly  any  book  or  stationery  seller. 


*4i 


,  i 


102 


COMMERCIAL    LAW    AND    BUSINESS    J- ORMS. 


KECAPITULATIOK 


1.  Negotiable  paper  is  that  which  may  be  transferred  by  indorsement 

and  delivery. 

2.  The  words  used  to  make  paper  negotiable  are  order  or  bearer. 

3.  A  promissory'  note,  is  a  written  promise  to  pay  a  certain  amount  of 

mon^y. 

4.  The  maker  of  a  note  is  the  original  debtor,  and  is  liable  to  any  person 

who  becomes  the  owner. 

5.  The  party  to  whom  paper  is  payable  is  the  payee  and  he  may  transfer 

it  to  another,  and  thus  become  the  inrUfrser. 
<i.     He  who  receives  paper  from  the  indorser  is  called  the  indorsee,  and 
he  may  indorse  to  another. 

7.  To  get  a  good  title  to  negotiable  paper  the  holder  must  have  received 

it  in  good  faith  for  value. 

8.  The  transfer  of  paper  before  maturity  may  give  the  party  receiving 

it  better  rights  than  the  payee  had,  but  it  cannot  if  received  after 
it  is  due. 

9.  The  general  modes  of  transferring  are  either  by  indorsement   and 

delivery,  or  by  delivery  alone. 

10.  There  are  six  diilerent  kinds  of  indorsement. 

11.  The  date  means  the  day,  month  and  year, 

12.  A  note  or  draft  may  be  written  on  any  paper  with  ink  or  with  pencil 

and  it  will  be  good. 

13.  The  payee  should  be  distinctly  named  in  commercial  paper  unless  it 

is  payable  to  bearer. 

14.  A  note  made  on  Sunday  is  void ;  a  note  made  by  a  minor  is  voidable. 

15.  Notes  bear  interest  only  when  so  stated,  except  after  maturity. 

16.  When  negotiable  paper  is  lost  or  stolen  it  does  not  release  the  maker; 

if  it  gets  into  the  hands  of  an  innocent  party  he  must  pay  it. 

17.  Notes  obtained  by  fraud,  or  made  by  a  person  while  intoxicated, 

cannot  be  collected. 

18.  Value  received  need  not  necessarily  be  inserted  in  negotiable  paper, 

but  it  is  desirable  for  the  holder. 

19.  If  no  lime  of  payment  is  mentioned  in  a  note,  it  is  payable  on  demand. 

20.  Paper  payable  to  bearer,  or  indorsed  in  blank,  may  be  transferred  by 

delivery  alone. 

21.  The  time  of  payment  must  not  depend  upon  a  contingency,  it  must 

be  based  upon  a  certainty. 

22.  The  maker  of  accommodation  paper  is  not  bound  to  the  party  accom- 

dated ;  but  to  any  other  person  receiving  the  paper  for  value  he  is. 

23.  The  holder  of  negotiable  paper  has  a  claim  against  every  person 

whose  name  appeared  on  it  at  the  time  he  received  it. 


J 


1   * 


NEGOTIABLE    PAPER. 


103 


24. 

25. 

20. 
27. 

28 

29. 

80. 

31. 
82. 

83. 
34. 

35. 

36. 

87. 

38. 
39. 

40. 

41. 

42. 

43. 

44. 
45. 

46. 


A  demand  note  is  valid  until  presented,  if  presented  within  a  reason- 
able time. 
No   particular  form  of  words  is  necessary  to  constitute  negotiable 

paper,  but  it  must  conform  to  certain  requirements. 
A  due  bill  is  an  acknowledgment  and  evidence  of  debt. 
A  draft  is  an  order  upon  a  person  to  pay  another  a  certain  sum  of 

money. 
A  bill  of  exchange  is  a  draft,  but  usually  drawn  on  a  bank  or  a 

banker.     It  may  be  inland  or  foreign. 
The  parties  to  negotiable  paper  are  original  or  subsequent:   the  latter 

are  only  conditionally  liable. 
The  drawer  of  a  draft,  the  acceptor  for  Tionor  and  all  endorsers  are 

only  conditionally  liable. 
Drafts  having  time  to  run  from  sight  must  be  presented  for  acceptance. 
When  demand  is  made  for  an  acceptance  and  is  refused,   the  draft 

must  be  protestc  d. 
An  acceptor  for  honor  must  be  u  >tified  the  same  as  an  indorser. 
A   husband  who  has  acquired  a  right  to  negotiable   paper  which 

was  given  to  his  wife,  either   before   or  after   marriage,  may 

indorse  it. 
If  the  payee  of  a  note  die,   his  executor  or  administrator  may  in- 
dorse it. 
The  maker  of  a  note  may  make  it  payable  to  his  own  order,  and 

when  indorsed  it  is  good  in  the  hands  of  the  indorsee. 
The  finder  of  negotiable  paper  does  not  get  any  title  to  it  and  cannot 

give  any. 
An  indorser  can  escape  lia])ility  by  using  "  without  recourse." 
Indorsements  should  be  written  across  the  back,  but  may  be  written 

on  the  face  of  a  bill  or  note. 
When  a  bill  or  note  is  received  as  security  for  a  debt,  and  it  is  dis- 
honored, the  debt  revives. 
When  two  or  more  persons,  who  are  partners  are  jointly  liable  on  a 

note,  notice  to  one  is  sufficient,  but  notice  to  both  is  better. 
If  a  note  or  bill  is  lost,  it  is  no   excuse   for  not  giving  notice  of 

protest. 
Notice  of  protest  must  be  sent  not  later  than  the  day  after  the  bill  is 

protested,  and  may  be  sent  to  all  indorsers  or  to  any  one  who  is 

perfectly  responsible. 
An  indorser  who  receives  notice  of  protest  should  notify  all  those 

who  preceded  him. 
Checks   should  be  presented  for  payment  the  same  day,  or  the  day 

after  they  are  received,  and  should  be  presented  during  business 

hours. 
A  check  when  endorsed  by  the  payee,  and  returned  to  the  drawer  by 

the  bank,  is  evidence  of  payment. 


^1 


104  COMMERCIAL    LAW    AND    BUSINESS    FORMS. 

47.  The  holder  of  a  draft  must  use  due  diligence  to  find  the  drawee  o» 

his  residence. 

48.  The  indorser  of  a  check  has  a  right  to  insist  that  the  indorsee  present 

it  the  same  or  the  next  day. 

49.  The  statute  of  limitation  does  not  run  while  the  debtor  is  out  of  the 

State.     After  a  debt  is  due  the  time  for  suing  is  limited  to  six 
years  in  New  York.     The  statute  does  not  cancel  the  debt. 

50.  Negotiable  paper  is  not  due  until  the  third  day  of  grace,  unless  it 

comes  on  Sunday  or  a  holiday. 

51.  Ignorance  of  law  does  not  excuse  any  person. 

52.  A  signature  written  with  a  pencil  is  good  at  law. 

53.  A  receipt  is  only  prima  facie  evidence,  not  conclusive.     It  is  written 

evidence,  but  not  a  contract. 

54.  No  contract  is  good  unless  there  be  a  consideration.     No  considera- 

tion is  good  that  is  illegal. 

55.  Part  payment  by  the  debtor  upon  a  debt  which  is  outlawed  revives 

the  balance. 

56.  An  "acceptance"   is  a  promise  to  pay,   and  is  only  applicable  to 

drafts. 

57.  Sealed  instruments  run  longer  than  parol  ones,  under  the  statute  of 

limitations. 

58.  A  debtor  has  no  right  (unless  it  be  made  by  contract,  or  by  statute, 

a  condition   precedent)  to  demand  a  receipt  as  a  condition  of 
payment. 

59.  The  sufficiency  of  a  "seal"  is  determined  by  the  local  law  of  the 

place.     In  some  States  a  scrawl  answers  the  purpose,  in  some  an 
impression  of  a  seal  on  the  paper,  but  generally  on  wax  or  wafer 

60.  A  contract  for  the  conveyance  of  land  in  fee  or  for  life  must  be  under 

seal. 

61.  There  are  several   ways    of  depositing  money;  savings   banks,  and 

most  other  banks  use  pocket  bank-books.     lu  all  a  voucher  ot 
some  kind  is  given. 

62.  Usually  a  firm-name  may  be  signed  by  any  one  of  the  partners. 

63.  At  present  (1882)  the  law  requires  a  two-cent  stamp  upon  every  check, 

the  fine  for  omitting  which  \s  fifty  doUars. 
04.     A  ape^iuUy  in  law  means  a  written  agreement  or  contract  under  seal, 
such  as  a  deed,  mortgage  or  protest. 

65.  A  bill  of  lading  is  negotiable,  and  when  indorsed  as  collateral  security, 

it  transfers  the  property  to  the  party  to  whom  it  is  given  as 
security. 

66.  A  deht&r  should  go  to  the  creditor,  or  party  to  whom  the  debt  is  due. 

and  pay,  but  in  case  of  negotiable  paper  with  indorsements,  it 
will  not  be  safe  for  the  holder  to  wait. 

67.  A  legal  tender  is  such  a  tender  as  the  law  requires,  and  the  debtor  may 

make  in  payment  of  the  debt :  gold,  silver  or  treasury  notes. 


4 


SALE  OF  PERSONAL  PROPERTY. 


'fr 


-»♦»■ 


214.  Contract  of  Sale. — The  contract  of  sale  of  personal 
property  is  governed  by  the  same  principles  of  law  as  other  con- 
tracts, and  any  person  who  can  make  other  legal  contracts  may 
make  a  contract  of  sale  and  perfect  it  by  delivery.  Barter  is 
supposed  to  be  much  older  than  sale,  and  consists  in  the  ex- 
change of  one  commodity  for  another.  It,  also,  is  governed  by 
the  same  general  principles. 

94*S.  Sale. — A  sale  is  the  transfer  of  the  title  in  the  thing 
sold  from  the  vendor  to  the  vendee  in  consideration  of  a  certain 
money  price.  We  use  the  word  sale  here  as  including  only  an 
absolute  immediate  transfer.  Contracts  to  sell  are  not  sales, 
and  may  be  conditional.  There  may  be  a  transfer  of  title  with- 
out a  sale,  and  this  may  occur  by  operation  of  law.  When  goods 
have  been  wrongfully  converted  by  another,  the  owner  may,  as 
the  lawyers  say,  loaive  the  tarty  and  sue  him  for  their  value  as 
though  there  had  been  a  sale  without  payment.  The  owner 
may  sue,  also,  for  the  wrongful  conversion,  and  recover  judg- 
ment for  the  value  of  the  goods,  in  which  case,  upon  payment 
of  the  judgment,  the  title  vests  in  the  wrong  doer.  To  consti- 
tute a  sale  the  absolute  title  must  be  transferred,  otherwise  it 
would  be  a  bailment  or  a  mortgage.  The  elements  that  are 
essential  to  a  valid  sale  are:  First,  the  thing  or  subject-matter 
of  the  sale;  Second,  the/:>r/cey  Third,  the  mutual  co7isent  of 
parties  who  have  the  ability  to  contract. 

246.  The  Subject-Matter.— The  thing  which  is  to  be  sold 
must  either  have  an  actual  or  potential  existence.  It  must  also 
be  capable  of  delivery.  If  goods  were  sold  which  were  sup- 
posed to  be  in  existence  at  the  time  of  the  sale,  but  which  were, 
in  fact,  destroyed  before  the  time  of  the  sale,  the  contract 
would  be  void.  But  the  goods  need  not  be  in  possession  to 
make  a  valid  sale.  If  they  have  been  consigned  to  the  vendor, 
and  are  on  the  way  in  the  course  of  conveyance,  the  sale  will 

105 


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COMMERCIAL   LAW    AND    BUSINESS   FORMS. 


li^' 


i- 


be  valid.  And  it  is  not  necessary  that  the  thing  should  be  in 
existence  at  the  time  of  sale,  if  it  is  to  come  into  existence  as 
the  product  of  something  the  vendor  now  owns,  or  has  an  inter- 
est in,  it  will  be  sufficient.  The  fruits,  or  other  crops  to  be 
grown  from  a  farm,  or  goods  to  be  manufactured,  or  the  fish  to 
be  caught  by  the  casting  of  a  net,  are  all  subjects  of  sale. 

^47.  A  Mere  Possibility.— A  mere  possibility  not  con- 
nected with  a  present  interest  in  any  property  which  the  vendor 
owns,  is  a  bare  contingency  wliich  cannot  be  the  subject  of  a 
present  sale,  but  may  be  the  basis  of  an  agreement  to  sell  in  the 
future.  For  instance,  a  person  cannot  sell  all  the  corn  that  he 
may  hereafter  buy.  He  has  no  present  right  in  any  corn,  and, 
therefore,  cannot  sell  any.  He  may,  however,  contract  to  sell 
goods  or  specified  articles,  or  all  the  corn  he  shall  buy  in  market 
during  a  certain  time,  and  to  deliver  them  for  certain  prices. 
But  such  contracts  are  not  in  strictness  sales,  as  we  before  ob- 
served, although  by  lawyers,  as  well  as  by  men  of  business,  they 
are  spoken  of  as  sales. 

248.  Legal  Subject-Matter.— No  sale  will  be  valid  unless 
the  subject  is  legal.  If,  therefore,  the  sale  of  any  property  is 
prohibited  by  statute,  a  contract  for  the  sale  of  such  property 
cannot  be  enforced. 

5J49.  The  Price. — The  price  is  the  consideration  which  is 
given  by  the  purchaser,  in  exchange  for  the  property,  and  which 
induces  the  seller  to  part  with  the  ownership.  Without  price 
there  can  be  no  sale;  it  would  be  merely  a  gift.  To  constitute 
a  sale  the  price  must  be  in  money,  or  in  some  representative  of 
money,  as  bills  of  exchange,  checks,  or  notes,  which  are  converti- 
ble into  money.  It  must  also  be  a  definite  and  certain  sum, 
or  susceptible  of  being  ascertained  by  some  means  by  the  terms 
of,  or  implied  by,  the  contract.  The  price  need  not  be  fixed  by 
the  parties;  the  contract  may  provide  some  way  of  getting  at 
the  price.  It  may  be  the  market  price,  or  the  price  some  other 
person  paid,  or  it  may  be  left  to  some  third  person  to  fix  a  price. 
But,  if  anything  happens  to  prevent  the  price  being  ascertained, 
there  is  no  contract.     The  general  rule  is,  that  the  parties  can 


:^ 


SALE  OF  PERSONAL  PROPERTY. 


10' 


agree  upon  any  price  they  choose,  and  mere  inadequacy  of  price 
does  not  make  the  contract  void  unless  it  is  so  grossly  inade- 
quate as  to  afford  presumption  of  fraud. 

SoO.  The  Consent  of  the  Parties.— Without  a  mutual 

consent  of  both  parties  to  the  terms  of  the  contract,  as  to  any 
other  contracts,  there  can  be  no  sale.  If  there  is  any  mistake 
about  the  identity  of  the  goods  or  thing  sold,  or  in  regard 
to  the  price  offered  or  demanded,  it  will  destroy  the  sale,  unless 
it  be  where  the  purchaser  supposes  the  price  is  larger  than  the 
seller  agreed  to  take.  Sales  may  be  negotiated  by  letter,  and, 
if  a  letter  of  acceptance  of  the  proposition  is  dropped  into  the 
post  before  notice  of  withdrawal  is  received,  the  contract  is 
complete.  But  the  vendor  has  a  right  to  withdraw  his  propo- 
sition any  time  before  it  is  accepted. 

251.  The  Mode  of  Making  the  Contract.— At  common 
law  no  form  of  words,  no  writing,  no  solemnity  is  necessary  to 
a  sale,  nor  to  a  contract  for  a  sale  whatever  the  price  or  value  of  the 
goods  may  be.  The  seller  and  the  buyer  agree  upon  the  price, 
the  buyer  pays  the  price,  and  the  seller  delivers  the  goods  to 
him,  and  there  is  the  end  of  it.  It  is  a  fullv  executed  contract 
of  sale.  So  a  binding  contract  to  sell  for,  and  to  pay,  a  certain 
price,  however  large,  was  good  at  common  law,  and  remains 
good  now,  in  all  cases  where  the  price  is  not  large  enough  to 
bring  the  contract  within  the  statute  of  frauds. 

*252.  Statute  of  Frauds  Generally.— The  British  statute 

of  frauds,  so  called,  was  passed  in  the  year  1677,  and  was  in- 
tended to  prevent  frauds  and  perjuries.  It  requires  certain 
contracts  and  conveyances  to  be  in  writing,  or  in  the  case  of 
sale  of  goods,  and  for  a  certain  price  or  more,  to  be  accompanied, 
if  not  in  writing,  by  a  delivery  of  the  goods,  in  whole  or  in 
part,  or  by  a  payment  of  part  of  the  price;  and  the  agreement 
in  writing,  or  the  proof  of  the  oral  agreement,  and  of  the  one 
or  other  of  the  acts  required  by  the  statute,  are  the  only  proofs 
of  the  contract  of  which  courts  can  take  notice.  This  statute 
has  been  re-enacted,  with  modifications,  in  almost  every  State  of 
the  Union.     Its  provisions,  and  the  language  in  which  they  are 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


clothed,  may  vary,  but,  in  substance,  it  is  almost  identical,  in  all 
of  them,  in  respect  of  sales,  agreements  to  sell,  an<l  agreements 
to  answer  for  the  debt,  default,  or  miscarriage  of  another  person. 

•2."S:i.  Appliration  of  tho  Statuto  to  Sales.— It  applies 
only  to  contracts  that  are  to  be  })erformed  in  the  future.  Con- 
tracts fully  executed  by  payment  and  delivery,  however  large 
or  small  the  price,  are  not  within  its  scope.  As  to  executory 
contracts  (those  to  be  performed  in  the  future),  it  is  everywhere 
confined  to  such  as  fix  not  less  than  a  certain  price  for  the 
goods.  The  statute  of  New-York  is  in  these  words:  "Every 
contract  for  the  sale  of  any  goods,  chattels  or  things  in  action, 
for  the  price  of  fifty  dollars  or  more,  shall  be  void,  unless: 
Flrsty  a  note  or  memorandum  of  such  contract  be  made  in  writ- 
ing, and  be  subscribed  by  the  parties  to  be  charged  thereby;  or, 
secondy  unless  the  buyer  shall  jiccept  and  receive  part  of  such 
goods,  or  the  evidences,  or  some  of  them  of  such  things  in  action  ; 
<»r,  f/iir(7,  unless  the  buyer  shall,  at  the  time,  pay  some  part  of  the 
jHirchase  money."  It  should  be  borne  in  mind  that  this  clause 
ap{)lies  only  to  pure  contracts  for  the  sale  of  goods,  and  so 
forth,  and  that,  if  a  contract  is  for  goods  to  be  made,  as  a  con- 
tract for  boards  to  be  made  from  certain  logs,  or  a  monument 
to  be  made  of  certain  pieces  of  marble,  it  is  not  within  the 
statute;  such  a  contract  is  for  labor  as  well  as  for  the  goods 
when  accepted. 

•251.  Further  Application  of  Statute. — The  statute 
of  frauds  embraces  all  contracts  for  property  which  exists  at 
the  time  in  the  same  condition  as  it  is  to  be  delivered,  where 
nothing  is  necessary  but  to  deliver  the  property  and  pav  the 
j>rice  to  complete  the  contract.  And  all  contracts  which  are 
executory,  where  at  the  time  of  the  sale  the  thing  exists 
in  the  same  condition  in  which  it  is  to  be  delivered.  But 
it  does  not  embrace  executory  contracts  for  the  delivery  of 
articles  which  have  to  be  manufactured  or  materially  changed 
by  work  expended  upon  them  before  they  can  be  delivered.  If 
a  farmer  offers  to  sell  a  merchant  a  thousand  bushels  of  wheat, 
which  is  threshed  and  ready  for  delivery,  at  one  dollar  per 
bushel,  and  the  merchant  accepts  the  offer  and  j)romises  to  ^all 


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8ALK  OF  PERSONAL  PROPERTY. 


109 


for  it  the  next  day,  it  is  within  the  statute,  and  the  farmer  neeo 
not  deliver,  unless  the  contract  be  in  writing.  So,  also,  if  one 
promises  to  make  and  indorse  a  note  with  others  to  raise  money 
to  i)ay  a  debt  for  a  third  party,  it  comes  within  the  statute,  and 
is  not  binding  unless  the  statute  be  complied  with. 

2.15.  Application  to  Contracts  not  to  be  Performed 

Avithin    a  Year.— The   statute   requires,    as   essential   to    the 
validity  of  such  a  contract,  that  the  contract  shall  be  in  writ- 
ing, signed  by  the  party  to  be  charged,  or  his  agent  authorized 
thereto,  or  a  memorandum,  or  note,  of  it,  so  signed,  shall  be 
made.     This  clause  applies  to  a  great  variety  of  contracts  as 
well  as  to  sales.     A  parol  contract,  to  come  within  the  statute, 
must  be  incapable  of  being  performed  within  a  year.     Where  a 
<5ontract  cannot  be  performed  within  the  year,  a  partial  per- 
formance  does  not,  but  a  full  performance  may  take  it  out  of 
the  statute.     For  example:  A.  agreed,  bv  parol,  to  serve  B.  for 
two  years,  for  $1,000,  and  served  the  whole  time;    or,  not    having 
served  the  whole  time,  he  is  discharged.     In  the  first  case,  he 
can  recover  only  on  the  contract,  and,  of  course,  only  the  con- 
tract price;  in  the  second  case,  he  cannot  recover,  proportion- 
ally, on  the  oral  contract,  because  that  is  void  by  the  statute, 
and  has  not  been  ratified,  but  he  is  entitled  to  the  worth  of  his 
services  rendered. 

256.  Application   to    Promises  to   Answer    for    the 

Debt  of  Another.— The  provision  of  the  statute,  in  this  re- 
gard, usually  is,  in  substance,  that  no  action  shall  lie  to  charge 
the   person   with   the  debt,  default,  or  miscarriage  of  another 
person,  unless  he  has  agreed  in  writing  to  be  so  chargeable,  and 
the  writing  be  signed  by  himself  or  some  person  duly  author- 
ized to  sign  it  for  him.     The  writing  may  be  either  a  full  and 
formal  agreement,  or  a  note,  or  memorandum,  clearly  exi)ressing 
his  obligation.     The  statute  applies  to  all  collateral  promises 
but  not  to  original  promises.     One^s  promise  to  pay  one's  own 
debt  is  an  original  promise;  but  a  promise  to  pay  the  debt  of 
another  is  a  collateral  promise.     Thus  it  was  early  decided  in  an 
English  court  that,  "if  two  came  to  a  shop,  and  one  buys,  and 
the  other,  to  gain  him  credit,  promises  the  seller,  «If  he'does 


HBtf 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


4 
I 


not  pay  you  I  will,' "  this  is  a  collateral  promise,  and  void, 
unless  it  is  put  in  writing.  But,  if  he  says  :  "  Let  hira  have  tlie 
goods,  I  will  be  your  paymaster,"  this  is  an  undertaking  for 
himself,  and  he  shall  be  intended  to  be  the  very  buyer,  and  tlie 
other  to  act  as  his  servant.  It  is  not  always  easy  to  determine 
whether  a  promise  is  original  or  collateral.  But  to  whomsoever 
the  credit  was  given,  he  is  the  oriyinal  debtor.  The  credit  L: 
not  always  given  to  the  party  who  receives  the  goods.  But  the 
party  who  did  not  receive  the  goods  always  has  the  right  to 
prove,  if  he  be  able,  that  the  other  party  was  the  purchaser,  and 
that  his  own  promise  was  only  collateral,  and,  consequently,  not 
binding,  unless  in  writing.  If,  however,  a  contract  can  be 
proven  to  be  an  original  promise,  it  cannot  come  within  the 
statute,  and  need  not  be  in  writing  to  be  binding. 

^••7.  The  Transit  of  Goods. — When  the  purchaser  lives 
far  from  the  seller  the  goods  should  be  sent  by  such  conveyance 
as  the  buyer  shall  indicate  or  direct.  When  no  directions  are 
given,  the  seller  may  send  them  by  the  customary  manner  of 
sending  such  goods.  If  ordinary  care  is  taken  in  sending  the 
goods  the  buyer  will  be  responsible  for  any  loss  that  is  sustained 
in  the  transit. 

The  goods  are  generally  at  the  risk  of  the  seller  only  unti? 
they  are  delivered  to  the  purchaser,  or  to  a  common  carrier  for 
conveyance.  And  when  they  are  delivered  to  any  common 
carrier  by  direction  of  the  purchaser,  the  responsibility  of  the 
seller  terminates.  If,  when  goods  are  sold  they  are  put  up  sep- 
arately in  a  box  or  parcel  ready  for  delivery,  and  the  purchaser 
then  requests  the  seller  to  hold  the  goods  for  him  for  a  time, 
and  the  goods  are  so  retained,  the  seller  then  becomes  the  bailee 
of  the  purchaser,  and  any  loss  which  is  not  caused  by  neglect  of 
the  bailee  must  be  sustained  by  the  purchaser. 

258.  Continued  Possession  by  Vendor. — The  possession 

of  goods  is  presumptive  evidence  of  ownership,  and  any  person 
having  goods  in  possession  is  presumed  to  have  the  right  to  sell 
them;  where,  therefore,  a  person  sells  goods,  but  does  not  de- 
liver them,  still  keeping  them  in  his  own  possession,  it  is  an 
indication  that  the  sale  is  not  genuine,  and,  if  a  third  person 


SALE  OF  PERSONAL  PROPERTY. 


Ill 


buy  the  goods  without  knowing  that  they  had  been  sold,  and  the 
goods  are  delivered  to  him,  his  title  is  good.  And  so,  if  goods 
are  sold  and  remain  in  the  possession  of  the  seller  a  considera- 
ble time  without  any  adequate  explanation  of  the  neglect  of 
transfer,  the  transaction  will  be  considered  void  as  far  as  it  con- 
cerns a  third  person  who  buys  innocently,  or  one  who  attaches 
the  property  to  secure  the  payment  of  a  debt. 

259.  Entire  or  Severable  Contract. — It  makes  a  material 
difference  in  regard  to  the  rights  and  remedies  of  the  parties, 
in  many  cases,  whether  the  contract  is  an  entire  one  or  severable. 
If  a  farmer  offer  to  sell  his  farm,  and  his  live  stock,  and  his  farm- 
ing implements,  and  his  growing  crops,  all  for  one  price,  as 
eight  thousand  dollars,  it  is  an  entire  contract;  and  if  the 
title  is  imperfect  to  any  one  of  them  the  purchaser  need  not 
take  any  part.  But  if  the  offer  be  to  sell  the  farm  for  six 
thousand  dollars,  the  live  stock  for  one  thousand,  the  farming 
implements  for  five  hundred,  and  the  growing  crops  for  five 
hundred  dollars,  and  the  offer  is  accepted,  the  contract  is  a 
severable  one,  and,  if  no  title  to  the  farm  can  be  given,  the  seller 
can  insist  upon  the  purchaser  taking  the  other  property.  A 
contract  which  was  originally  entire  may  be  rendered  severable 
by  the  parties  doing  something  in  connection  with  it  which  is 
inconsistent  with  its  entirety. 

260.  Conditional  Sales. — A  sale  may  be  on  condition  that 
the  vendee  pay  for  the  goods  within  a  specified  time,  and,  in 
the  meantime,  he  may  have  possession  of  the  goods  and  have 
the  right  to  use  them  until  the  time  expires.  But,  if  he  fail  to 
pay  at  the  specified  time,  the  contract  is  void.  Such  a  purchaser 
has  no  right  to  sell  the  goods,  nor  can  they  be  attached  to  pay 
his  creditors  until  the  sale  is  completed.  So,  also,  property  may 
be  sold  with  the  condition  that  the  purchaser  may  use  it  for  a 
certain  length  of  time,  and,  if  it  is  not  adapted  to  the  use  he 
wishes  to  make  of  it,  he  may  return  it.  If  in  such  case  the 
time  is  limited,  and  he  fails  to  return  it  within  the  time, 
the  sale  is  binding.  And  if  a  man  sell  goods  w^ith  the  condi- 
tion that  he  may  buy  them  back  within  a  specified  time,  by 
paying  a  certain  fixed  price,  and  he  neglects  to  buy  them  within 


m 


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COMMERCIAL    LAW    ANI>    BUSINESS    FORMS. 


SALE    OF    PERSONAL    PROPERTY. 


113 


ltd' 


SI  5 


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the  time,  he  loses  his  right  immediately  upon  the  expiration 
thereof. 

361.  Disclosure  of  Certain  Facts.— It  is  important  to  a 
business  man  to  know  what  obligations  devolve  upon  him  in 
regard  to  disclosing  facts  in  relation  to  the  goods  which  are  to 
be  sold.  The  law  holds  him  responsible  for  neglecting  to  dis- 
close certain  facts  in  relation  to  the  goods.  If  he  were  governed 
by  the  moral  law  he  would  make  known  to  the  purchaser  every 
defect  he  had  knowledge  of.  But  the  common  law  is  not  so 
exacting.  Disclosures  of  defects,  which  are  equally  known  by 
both  parties,  need  not  be  made.  Only  material  facts  which  are 
not  known  to  the  purchaser,  and  are  not  open  to  his  observation, 
need  to  be  disclosed.  Defects  which  are  equally  open  to  both 
parties  need  not  be  disclosed;  only  such  as  the  seller  has  knowl- 
edge of  when  the  buyer  has  not.  If  misrepresentations  are 
made  knowingly  to  induce  the  vendee  to  purchase,  it  will  be 
evidence  of  fraud,  and  the  vendee  may  avoid  the  contract. 
So,  also,  if  a  seller  was  induced  to  make  a  sale  by  misrepresen- 
tations he  may  annul  the  contract. 

^€i*2.  Sale  of  Stoleu  Goods.— A  person  may  have  the 
possession  of  goods  without  being  the  oicner.  But  no  person 
can  make  a  valid  sale  of  the  goods  unless  he  is  the  owner,  and 
if  he  be  the  owner,  he  may  sell,  although  the  goods  are  not  in 
his  possession.  It  follows,  therefore,  that  no  person  can  sell 
stolen  goods  so  as  to  give  a  good  title  to  the  purchaser.  Even 
where  goods  are  sold  at  public  auction  the  purchaser  does  not 
get  any  title  if  the  goods  were  stolen,  and  the  owner  of  the 
goods  may  take  possession  of  them,  if  he  can  find  them,  not- 
withstanding they  may  be  in  the  hands  of  an  innocent  purchaser. 
The  law  has  gone  so  far  as  to  make  an  auctioneer  pay  for  goods 
which  had  been  received  and  sold  by  him,  without  any  knowl- 
edge of  their  having  been  stolen.  There  is  an  exception  to  this 
rule,  however,  in  the  case  of  money  or  negotiable  paper  which 
is  transferable  by  delivery,  either  of  which,  if  transferred  after 
it  is  stolen  or  found,  the  holder,  who  takes  it  for  value  witliout 
knowledge  of  any  wrong,  will  have  a  good  title,  and  can  hold  it 
against  the  original  owner. 


363.  Place  of  Delivery  of  Goods.— When  there  is  no 

agreement  as  to  the  particular  place  of  delivery,  and  no  general 
custom  regulating  it,  then  the  place  where  the  goods  are  when 
sold  is  generally  understood  to  be  the  place  of  delivery.  But  it 
has  been  held  that,  where  a  sale  is  to  pay  a  debt,  the  property 
should  be  delivered  at  the  residence  of  the  creditor,  or  at  his 
place  of  business. 

364.  Sale  of  ''  Good- Will."— By  good-will  we  mean   a 
man's  business,  or  the  busiiiess  of  a  firm,  as  distinguished  from 
the  stock  in  trade  or  capital.     It  is  the   reputation  which  has 
been  made  in  and  for  the  business,  which,  it  is  presumed,  will 
continue  to  draw  business,  and  induce  old  customers  to  continue 
doing  business  with  the  concern.     In  manufacturing  and  com- 
mercial   business   good-will  is  sometimes  of   great   value.      In 
general   the   party  selling   the  good-wiU  of   his   establishment 
binds  himself  not  to  again  engage  in  the  same  business  within 
the  limits  of  the  old  business,  or  where  it  will  render  the  good- 
will valueless,  or  seriously  injure    it.     But,  as    there  are  many 
ways  of  avoiding  such  an  agreement,  the  purchaser  of  the  good-will 
should  insist  upon  a  contract  which  shall  specify  the  amount  he 
shall  receive  as  damages  if  the  seller  becomes  interested  in  a 
competing  business.     Frequently  the  good-wiU  of  a  business  is 
worth  more  than  the  stock  in  trade  would  be  without  it. 

36.1.  Delivery  to  a  Third  Person.— To  be  effective,  the 
delivery  of  goods  must  be  either  to  the  vendee  or  to  some  person 
by  him  authorized  to  accept  for  him,  A  parol  contract  for  the 
sale  of  goods  for  a  price  exceeding  fifty  dollars  specified  a 
carrier  of  them;  but  it  was  held  that  the  carrier  had  no  author- 
ity to  accept  them  for  the  vendee,  and  that  delivery  to  him  did 
not  satisfy  the  statute.  So,  upon  the  principle  that  a  man  can- 
not serve  two  masters,  it  has  been  held  that  a  broker  cannot  act 
for  both  the  seller  and  the  buyer  of  goods,  and  deliver  for  the 
one  and  accept  for  the  other,  and  so  take  the  sale  out  of  the 
statute. 

366.   Necessary  Delirery.-The  statute  provides  that  the 
contract  of  sale  mav  be  completed  by  a  delivery  of  part  or  of 


— '  » t< 


]14 


COMMERCIAL    LAW    AND    BUSINESS    FOKMS. 


all  the  goods.  It  is  important  to  know  how  small  a  part  may  be 
delivered  and  yet  be  sufficient.  The  delivery,  whether  of  the 
whole  or  part,  must  be  with  the  intention  of  transferring  the 
right  of  possession  to  the  whole  from  the  vendor  to  the  vendee. 
The  vendee  must  accept  with  the  intention  of  receiving  it  as 
owner.  The  rule  is,  that  where  a  part  only  of  the  goods  is 
delivered,  it  must  be  sufficiently  large  to  lessen  the  quantity  to 
be  delivered.  There  may  also  be  a  symbolical  delivery,  as 
where  grain  is  stored  in  an  elevator,  and  a  delivery  order  on  the 
warehouseman  is  given  to  the  purchaser  and  is  accepted  by  the 
warehouse-keeper,  or,  where  a  stock  of  goods  in  a  store  is  sold 
and  the  key  to  the  store  is  delivered  to  the  purchaser. 

^67.  Effect  of  Sale. — A  valid  sale  transfers  the  owner- 
ship in  the  property  from  the  vendor  to  the  vendee;  it,  there- 
fore, follows  that,  if  the  ownership  is  not  transferred,  it  is  not  a 
sale.  The  price  is  also  transferred  from  the  vendee  to  the 
vendor.  But  the  vendee  has  no  right  to  demand  the  transfer  of 
the  possession  of  the  goods  until  he  has  paid  the  price,  or  ten- 
dered the  full  amount  to  the  vendor.  But  if  a  credit  is  given, 
by  tixing  a  future  time  at  which  the  price  may  be  paid,  the 
vendee  can  then  demand  an  immediate  delivery  of  the  goods. 
If  no  credit  is  given,  the  vendor,  by  delivering  or  offering  to 
deliver,  can  demand  the  immediate  payment  of  the  price.  And 
where  the  owner  of  goods  offers  to  sell  them  at  a  certain  price, 
and  the  other  party  accepts  the  offer,  but  refuses  to  pay,  the 
owner  may  treat  the  sale  as  void. 

5868.  The  Specific  Property.— The  sale  cannot  be  com- 
pleted, nor  the  property  be  transferred,  until  the  article  con- 
tracted for  is  in  the  particular  condition  which  the  terms  of  the 
contract  demand.  If  the  contract  specify  a  particular  article  in 
existence,  or  prescribe  that  the  article  be  made  of  certain 
things,  it  cannot  be  satisfied  by  the  delivery  of  a  precisely 
similar  thing,  or  of  an  article  made  of  similar  but  not  the 
identical  things.  A  manufacturer's  agreement  to  sell  and  deliver 
a  set  of  furniture  of  a  certain  description  at  a  future  day,  does 
not  bind  him  to  deliver  any  particular  set  of  such  furniture, 
♦.houo-h  he  have  one  on  hand  at  the  time  of  the  contract. 


l|N 


SALE  OF  PERSONAL  PROPERTY. 


115 


^69.  Title  to  Goods  Sold.— The  ownership  of  goods  sold 
does  not  pass  under  an  executory  contract  until  delivery.  If  the 
party  who  has  agreed  to  sell  refuses  to  deliver  the  goods,  the 
buyer,  whether  he  has  paid  the  price  or  not,  is  not  vested  with 
the  title  to  them,  and  his  remedy  is  simply  an  action  for  damages 
for  the  breach  of  the  contract. 

270.  Care  of  the  Goods  after  Sale.— When  the  sale  is 
perfected  and  the  title  has  passed  to  the  buyer,  but  the  seller  is  yet 
to  transmit  the  goods  to  the  buyer,  or  keep  them  until  called  for, 
he  is  bound  to  take  ordinary  care  of  them,  such  as  a  man  of 
ordinary  prudence  takes  of  his  own,  and  is  liable  to  the  owner 
for  any  damages  sustained  through  want  of  such  care. 

271.  Bill  of  Parcels.— A  bill  of  parcels,  commonly  called 
a  "  bill,"  and  also  called  an  "  invoice,"  is  a  written  list,  or  account, 
of  goods,  given  by  the  seller  to  the  buyer,  describing  the  articles 
purchased,  giving  the  value  or  price  of  each  article,  and  extend- 
ing the  figures  into  an  item-column,  for  convenience  in  showing 
the  whole  amount. 

272.    Form  No.  51. 

1882. 


Messrs.  ^. 


Buffalo,  Jlc. 


^^€^-a 


:^# 


-^c. 


^. 


/ 


laug^l  nf  MATTHEWS,  NORTHRUP  &  CO., 


PUBLISHERS    OF 


TEE   JVEW  SERIES  BOOK-KEEPT.ya 


50 
100 
200 
300 
100 
200 


Counting-IIoum  Book-Keeping 
Cinnmercial  Book-Keeping 
Common  School  Book-Keeping 
Elementary  Book-Keeping    . 
Sets  Commercial  Blanks  .     . 
Sets  Common  School  Blanks 

Rec'd  Payment, 


116 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


11 


^73.  Bill  of  Sale. — A  bill  of  sale  is  a  formal  written  con- 
veyance of  personal  property.  If  the  property  is  delivered 
when  sold,  or  if  part  of  the  purchase  money  is  paid,  a  written 
instrument  is  not  necessary  to  make  the  conveyance  binding,  but 
it  is  convenient  evidence  of  the  transfer  of  title.  But  to  pro- 
tect the  interest  of  the  purchaser  against  the  creditors  of  the 
seller,  the  bill  of  sale  is  not  sufficient  of  itself,  there  should  also 
be  a  delivery  of  the  property.  If  an  actual  and  continued 
change  of  possession  does  not  accompany  the  sale  it  is  void  as 
against  the  creditors  of  the  seller  and  subsequent  purchasers 
and  mortgages  in  good  faith,  unless  the  buyer  can  show  that  his 
purchase  was  made  in  good  faith,  without  intent  to  defraud,  and 
that  there  was  some  good  reason  for  leaving  the  property  in  the 
hands  of  the  seller. 

Form  No.  52.  f 

274.    Bill  of  Sale. 

JvUOVU  ;iU  2*1  Cn  bxj  these  ^VCSCntSfT/^atdorwe, 
here  give  name  of  the  person  or  persons  of  the  frsy.  "^arC,  giving 

towfi,  county  and  tState  where  such  party  resides) 

of  the  first  part,  for  and  in  consideration  of  the  sum  of 

-lawful  money  of  the  United  States, 

to- - in  hand  paid,  at  or  before  the  ensealing 

and  delivery  of  these  presents,  by  (here  insert  name  and  residence 

of  second  party)  - _ 

of  the  second  part,  the  receipt  whereof  is  hereby  acknowledged^ 
ha  bargained  and  sold,  and  by  these prese7its  do  grant  and  con- 
vey, unto  the  said  part  of  the  secotid  part,  [his  or  their)  executors, 
admiyiistrators  and  assigns,  [here  give  a  full  and  accurate  de- 
scription of  the  property  sold.). _ _ _ 


SALE  OF  PERSONAL  PEOPERTY, 


To  JtUUC  unci  to  ^Olcl  the  same  unto  the  said  part  of 
the  second  part, — _ executors,  administrators  and 

assigjis  forever.     A  nd do  for. „ _ 

heirs,  executors  and  administrators,  covenant  and  agree,  to  and 
with  the  said  part  of  the  second  part,  to  warrant  and  defend  the 
sale  of  the  said  property 

hereby  sold  unto  the  said  part    of  the  seco?id  jyart, « 

executors,  administrators  atid  assigns,  agaitist  all  a7id  every  per- 
son and  persons  whomsoever. 


117 


%n  ^ttnCBS  mttereof, haveh^reunto 

^^ hand    and  seal     the- fjay  of 

- "-**'*    ^^*«    y^<^r   one    thousand  eight   hundred 


and. 

SEALBD  AND  DELIVERED 
IN  THE   PRESENCE  OF 


\ 


Signature. 


ss. 


STATE  OF  NEW- YORK, 

County    of 

^''  ^^''' day  of. i^  (^^ 

year  one  thousand  eight  huiidred  and hefore  oie  the 

subscriber,  personally  came.  ' 

tome  known  to  be  the  person"' de^s^edi  in  ^^^ 

within  instrument,  and ^.,/.„^    /   i    ^ 

that    he    executed  the  swne. " acknowledged 

Form  No.  53. 
ars.  Bill  of  Sale  of  a  Horse,  with  Warranty. 

^^}°^  f^}^  W^,^^;  *y  '''*«««  lyresents,  tliat  I,  (D.  F.\  of  the 
r  ^  f  1.^^''^'"^}.  'i'^T'y  "/  ^^^y^hoya,  andkaU  of  Ohio 
I  restock  broker,  of  the  first  part,  in  co^isideration  of  one  hundred 
dollarain  money,  and  a  note  of  one  hundred  Jd  fifty  doZrs 
rece^vedyrom  (It.  H.)  lawyer,  party  of  the  second  partftl  TecZ 
whereof  J  hereby  acknowledge,  have  bargained,  sod,  granUd 
and  conveyed,  and  by  these  lyresents  do  bargain,  sell  grant  and 
convey  unto  the  said  party  of  the  second  pan,  hiseTcufofs 
adnnmstrators  and  assigns,  one  black  horse,  six  yearsZTwih 
white  right  fore  foot,  known  as  Barney;  to  have  and  to  hold  the 
sanieunto  the  said  party  of  the  seconlpart,  hUeZutorsadJt 
istratorsand  assigns  forever.  And  I  do  hereby  warZuthelaid 
horse  to  be  sound  in  every  respect,  and  to  be  fre^e  frZn^ytrTckf 

deirdth^:aiS  !L  '"lf!f  l!"""r-   /'"'^  ^o   ^aJ^antand 

itfp^tr:^dt:st'wlzZer:'''' '"''  ^^^''^  ^  -<^ 

|tt  Witness   m\itXtat,  I  h^eunto   set  my  hand 
and  seal  this., ^ay  of. jgg 

Signature. 


A 


118 


COMMKRCIAL    LAW    AND    BUSINESS    FORMS. 


I 


fW6.  Chattel  Mortgage.— A  chattel  mortgage  is  a  trans- 
fer of  the  title  to  chattels  with  or  without  possession,  as  security 
for  a  liability  or  a  debt,  upon  condition  that  the  transfer  shall 
be  void  if  the  liability  or  debt  be  discharged  or  paid.  If 
the  debt  is  not  paid  at  the  time  appointed,  the  mortgagee 
becomes  absolute  owner,  and  has  a  right  to  take  the  chattels 
into  his  own  possession  if  they  are  not  already  in  his  possession, 
and  his  creditors  likewise  have  a  right  to  levy  on  the  chattels  as 
his  property.  But  the  mortgagor  has  the  right  to  redeem  the 
chattels  from  the  mortgage,  and  this  right  can  only  be  cut  off 
by  the  mortgagee  selling  the  property  and  applying  the  proceeds 
to  the  payment  of  the  debt.  But,  unless  the  mortgage  requires 
it,  he  is  not  bound  to  sell;  he  may  hold  the  goods  as  owner, 
subject  only  to  the  mortgagor's  right  to  redeem.  And,  when 
the  goods  are  of  sufficient  value  to  pay  the  debt,  his  holding 
them  may  be  regarded  as  payment. 

Form  No.  54. 

•277.  Chattel  Mortgage. 

To  all  ta  txTltam  tltcsc  1!?vc6cnt6  shut!  come: 

Know  ye,  that  {here  insert  name  o/\p'rst  party,  with  town, 
eotmty  and  State)  of  the  first  part,  being  justly  indebted  to 
_ _(here  name  of  second  party ,  etc.)  of  the  secoyid  part 

in  the  sum  of Dollars,upo7i  {condition  that  if  the 

said  party  of  the  first  part  shall,  and  do,  icell,  and  t'ndy  pay,  etc.) 
have,  for  the  purpose  of  securing  the  payment  of  the  said  debt, 
and  the  interest  thereof,  granted,  bargained,  sold  and  mortgaged, 
and  by  these  presents  do  grant,  bargain,  stU  and  mortgage  unto 
the  said  party  of  the  second  part,  all  and  singular  the  goods, 
chattels  and  personal  property  mejitioyied  aiid  described  in  the 
following  schedule,  to  wit:  {here  give  afuU  and  accurate  descrip- 
tion of  the  property,) 

To  JtuUC  itUd  to  Hotel  the  same  and  every  part  and 
parcel  thereof,  unto  the  said  party  of  the  second  part  forever. 
Provided  always,  and  the  condition  of  these  presents  is  such, 
that  if  the  said  party  of  the  first  part  pay  to  the  said  party  of 
the  second  part  the  debt  aforesaid,  with  the  interest  thereon  from 
the  date  hereof,  in  the  manner  foUmcing,  to  loit :  {here  mention 
how  and  when  it  is  to  be  paid)  then  these  presents  shall  be  void 
and  of  no  effect;  subject,  however,  to  the  provisions  hereinafter 


■J  ^! 

id 


SALE    OF    PERSONAL    PROi'EKTY. 


119 


contained ;-  and  the  said  party  of  the  first  part  do  hereby 
agree  to  pay  the  same  accordingly] 

But  if  default  be  made  in  such  imyment,  or  if  the  said  jyarty 
of  the  second  2)^rt  shall  at  any  time  deem  in  danger  of 

losing  the  said  debt,  or  any  part  thereof,  by  ddaying  the  collertion 
thereof  until  the  expiration  of  the  time  above  limited  for  tJte  2>ay' 
ment   thereof,  the  said  party  of  the  second  part  hereby 

authorized  to  take  possession  of  the  said  goods,  chattels  and  per- 
sonal property,  at  any  time,  either  before  or  after  the  eirpiration 
of  the  time  aforesaid,  and  to  sell  the  same,  or  so  much  thereof  as 
may  be  necessary  to  satisfy  the  said  dehf^  interest  and  reasonable 
expenses,  after  the  like  notice  as  is  by  lem  required  for  Constables'' 
Sales,  and  to  retain  the  sanie  out  of  the  ^yroceeds  of  mch  sale; 
the  overplus  {if  any)  to  belong  to  and  to  be  returned  to  the  said 
party  of  the  first  part.  And  it  is  understood  and  agreed  that  the 
stipulations  aforesaid  are  to  apply  to  and  to  bind  the  heirs,  execu- 
tors and  administrators  of  the  resjjective  jjarties, 

|n   ?®lUnCSS     (SSlTtCVCOf,  the  said  party  of  the  first 
part  ha       hereunto  set  hand    and  seal    this  (hiy  of 

in  the  year  one  thouscmd  eight  hundreel  and  eighty 
In  jmesence  of 


Form  No.  55. 


{Signature?^ 


278.  Short  Form,  Chattel  Mortgage. 

JvUOXU  all   ^Etcn^  by  these  presents,  that  I,  {C.  D.)   of 

— acknowledge  myself  to  be  indebted  to  {II. 

S.)  of  said in  the  sum  of 

dollars  with  interest  from  this  date  {or  from 

the _ day  of 18     ,)  and  for  the  security 

of  said  sum  I  do  hereby  mortgage,  and  sell,  and  assign  to  the 
said  {II.  S.)  all  my  property  of  every  description,  situate,  lying, 

and  being  iii  my  store  No Street 

in  the  Village   of „ _.;    aiid  I  do   hereby 

authorize  and  empower  the  send  [H.  S.)  to  take  possession  of  said 
property  and  effects,  he  to  sell  the  same,  and  to  appropriate  the 
proceeds  to  tJie  payment  of  such  debt  and  interest. 

%\\  *S21ltlXC6S   MlltCVCOf^  /  have   hereunto  set  my 

hanel  and  seal,  at this. day 

of- IS     . 

In  presence  of 

{Signature  of  Mortgagor) 
{Signature  of  witness.) 


m 


It 


'if 


i 


m 

> 

i 

120 


commercial  law  and  business  forms. 

Form  No.  56. 
279.  Cliattel  Mortgage  Renewal. 

Z-.... 


the _ Mortgagee  named  in  the  Mortgage^  of 

which  the  foregoing  is  a  copy,  do  hereby  give  notice  to  all  whom 

it  may  concern^  that   there   remains   due   to of  the 

principal  stim  secured  by  said  Mortgage,  the  siitn  of. 

dollars  and 

centSy  and  that interest,  as  such 

Mortgagee     in  the  property  included  in   said  Mortgage,  and 

ther^y  and  hereby  claimed  by ^is  the  sum  of 

dollars  and. cents,  and  the  interest 

thereon  from  the day  of 18 


Dated  the ^day  of. 


.18 


.Mortgagee, 


Form  No.  57. 
280.  Chattel  Mortgage  Sale. 

By  virtue  of  a  Chattel  Mortgage  executed  by 

to „ .dated  the day  of_ 18    . 

and  fled  in  the  office  of  the  Clerk  of  the of. _ _ 

on   the day   of 18        ,  and  upon   which 

default  has  been  made,  I  shall  sell  the  property  therein  described 

and  m,entioned,  v  iz : 

at  Public  Auction,  at  the Jn  the 

o/-. on  the day  of 18         at 

o"^ clock  in  tJu noon  of  that  day, 

^ated  at^ tlie. day  of. 18 


Mortgagee's  Agent, 


% 


WARRANTY. 


-»-♦-•- 


281.  Sales  With  Warranty. — Sales  with  warranty  are 
frequently  made,  and  may  be  either  general  or  special,  express 
or  implied.  The  maxim  of  the  law  in  regard  to  buying  is  caveat 
emptor  {let  the  buyer  beware) ;  that  is,  he  must  look  out  for  his 
own  interests,  and  examine  carefully  before  he  makes  a  pur- 
chase, as  he  cannot  ahcays  hold  the  seller  as  a  guarantor. 

282.  A  General  Warranty.— A  general  warranty  does 
not  cover  all  defects.  Such  defects  as  are  equally  open  to  the 
observation  and  examination  of  both  parties,  or  as  are  known  to 
the  purchaser,  are  not  covered  by  a  gerieral  warranty.  But  the 
purchaser  may  relieve  himself  from  all  responsibility  concern- 
ing defects,  and  all  trouble  of  examining  the  goods,  by  requir- 
ing a  general  warranty  against  all  defects.  But  if  a  defect  is 
known  to  the  purchaser  it  will  not  be  considered  as  coming 
within  the  warranty. 

283.  An  Express  Warranty.— An  express  warranty  may 
be  any  direct  affirmation  made  by  the  seller  in  regard  to  the 
goods  at  the  time  they  are  sold,  with  that  intent.  But  the 
vendor  will  not  be  bound  beyond  the  express  terms  of  the  war- 
ranty. Nor  will  he  be  bound  for  representations  made  after 
the  sale,  for  the  reason  that  there  is  no  consideration  to  support 
them.  The  warranty  must  operate  as  an  inducement  to  the 
completion  of  the  purchase  to  be  effective.  Declarations  of 
opitiioii  do  not  constitute  a  warranty,  but  if  they  are  intended 
to,  and  have  the  effect  of  deceiving,  the  sale  may  be  avoided  on 
the  ground  of  fraud. 

284.  Special  Warranty.— When  a  particular  thing  is  or- 
dered for  a  special  purpose  of  a  manufacturer,  and  it  is  fur- 
nished, the  purchaser  may  hold  the  manufacturer  responsible  on 

121 


122 


COMMERCIAL   LAW    AND    BUSINESS    FORMS. 


' 


f 


an  implied  warranty  that  it  is  fit  for  the  purpose  for  which  it 
was  ordered,  and  if  it  is  not  suitable  for  the  purpose,  and  dam- 
age is  sustained  in  consequence,  the  vendor  will  be  liable  for  the 
damage.  But  where  the  purchaser  himself  selects  the  thing  to 
be  used,  the  vendor  is  not  bound  by  any  warranty. 

285.  Implied  Warranty.— When  a  person  sells  personal 
property  which  he  has  in  his  possession  at  the  time  of  sale,  there 
is  an  implied  warranty  that  he  is  the  owner.  But  where  prop- 
erty is  sold  which  is  not  in  possession  of  the  vendor,  there  is  no 
such  implied  warranty,  unless  he  affirm  that  he  is  the  owner. 
If,  however,  the  situation  or  nature  of  the  goods  is  such  as  to 
render  an  examination  impracticable,  there  will  be  an  implied 
warranty  that  they  are  merchantable. 

286.  Breach  of  Warranty.— The  rule  in  regard  to  breach 
rf  warranty  seems  to  be  that  tho  purchaser  has  no  authority  for 
feturning  the  property  which  he  bought,  unless  there  was  an 
agreement  under  the  warranty  that  he  might  do  so;  his  only 
remedy  being  to  sue  for  damages  under  the  warranty.  But 
where  the  vendor  knows  that  a  thiiig  is  ordered  f(^r  a  special 
purpose,  and  it  is  not  fit  for  that  purpose,  the  buyer  may  return 
it,  if  he  do  so  as  soon  as  its  unfitness  is  discovered. 

287.  Sales  by  Sample.— Where  goods  are  sold  by  sample 
there  is  usually  an  implied  warranty  that  the  goods  shall  be  as 
good  as  the  sample.  But  the  warranty  does  not  apply  to  the 
quality  of  the  sample,  so  as  to  make  it  just  what  it  seems  to  be. 
All  that  the  vendee  can  claim  under  the  warranty  is  that  the 
bulk  shall  be  equal  to  the  sample.  But  some  sales  which  are 
made  ly  sample  do  not  create  an  implied  warranty.  Tlie  rule 
is,  that  if  the  bulk  of  the  goods  is  fully  exposed  within  the  im- 
mediate reach  of  the  purchaser,  it  devolves  upon  him  to  examine 
it,  and  if  he  fail  to  do  so,  he  cannot  recover,  unless  there  be  an 
express  warranty.  It  is  only  where  there  is  a  mutual  under- 
standing between  the  parties  that  they  are  dealing  under  a 
promise  from  the  vendor  that  the  bulk  shall  be  as  good  as  thfl 
sample,  that  an  imj^lied  warranty  exists. 


ii 


ju 


|iN 


ll. 


WARRANTY, 


123 


288.  Descriptive  Bill  of  Sale.— There  has  been  some 
difference  of  opinion  as  to  whether  a  descriptive  bill  of  sale 
constituted  a  warranty  or  not.  A  case  is  reported  in  Massa- 
chusetts where  the  bill  of  sale  was  as  follows:  "B.  &  Co.  bought 
of  F.  M.  &  Co.,  two  cases  of  Indigo:'  But  the  discovery  was 
made  that  it  was  mostly  Prussian  Blue  instead  of  indigo. 
There  was  no  charge  of  fraud,  and  the  point  was,  does  the  bill 
of  sale  constitute  a  warranty  ?  It  was  held  that  it  did.  But  in 
the  sale  of  a  horse,  where  a  receipt  was  given,  "Received  of 
C.  D.  one  hundred  dollars  for  a  black,  six-year-old  horse,  war- 
ranted perfectly  sound,"  it  was  held  that  the  color  did  not  form 
a  part  of  the  warranty,  unless  it  were  a  wilful  misrepresentation 

The  courts  of  Pennsylvania  hold  that  a  bill  of  sale  is  a  war- 
ranty of  the  kind  of  goods  but  not  of  the  quality.  A  bill  of 
sale  describing  the  goods  as  ^^  superior,  sweet-scented  Kentucky 
leaf  tobacco,''  was  held  by  the  court  to  be  a  warranty,  only  that 
It  should  be  "  Kentucky  leaf  tobacco,"  and  that  it  did  not  war- 
rant the  quality.  But  this  seems  to  be  at  variance  with  deci- 
sions which  have  been  made  in  other  States. 

289.  Executory  Contract  Warranty.— W^hen  goods  are 
to  be  manufactured,  or  furnished  for  a  particular  purpose,  there 
will  be  an  implied  warranty  that  the  goods  shall  be  adapted  to 
the  purpose  for  which  they  were  ordered.  One  reason  for  this  is 
that  the  purchaser  has  no  opportunity  to  examine  the  o-oods 
when  they  are  purchased.  "^ 

290.  Warranty  Against  Latent  Defects.— There  will 

always  be  an  implied  warranty  against  latent  defects  when  the 
vendor  knows  that  the  purchaser  depends  upon  him  instead  of 
using  his  own  judgment  in  relation  to  defects  which  were  known 
or  might  be  known  to  the  seller,  and  where  he  could  have 
guarded  against  the  defects.  Such  implied  warranty  is  grounded 
m  the  trust  confided  in  the  vendor  by  the  vendee. 


%: 


G  IT  A  R  A  X  T  Y. 


301,  A  Ouaranty. — A  guaranty  is  an  undertaking  to 
answer  for  the  payment  of  some  debt,  or  the  performance  of 
some  duty,  in  case  of  the  faihire  of  another  liable  for  such  pay- 
ment or  performance. 

•20'2.  The  Essentials. — The  essentials  of  the  contract  of 
guaranty  arey^p'rst,  the  consideration/  second,  ?i  principal  debtor/ 
and,  third,  the  consent  of  the  party  to  whom  given, 

39«l.  Consideration. — The  consideration  is  indispensable 
to  the  contract,  and  its  analysis  is  the  same  as  that  of  ordinary 
contracts,  with  the  notable  difference  that  the  benefit  or  advan- 
tage to  be  derived  from  it,  instead  of  being  in  favor  of  the 
guarantor,  must  accrue  to  the  party  in  behalf  of  whom  the 
promise  is  made.  The  guarantor  need  not,  and  generally  does 
not,  derive  any  benefit  from  the  contract.  When  the  original 
debt  or  duty  is  grounded  upon  a  good  consideration,  it  will 
support  the  promise  of  the  guarantor  if  the  promise  was  made 
at  the  same  time,  or  before  the  original  debt.  But  if  the  debt 
or  duty  had  already  been  incurred  there  must  be  a  new  con- 
sideration to  support  the  guarantor's  promise.  If  there  be  a 
benefit  to  the  person  for  whom  the  guaranty  is  given,  or  an 
injury  to  the  party  who  is  to  receive  it,  it  will  be  a  sufficient 
consideration  when  the  guaranty  was  given  on  account  of  it. 

!394.  A  Principal  Debtor. — As  the  undertaking  of  the 
guarantor  is  conditional  or  accessorial,  there  must  be  a  principal 
debtor  to  whose  obligation  the  guarantor's  contract  must  relate. 
The  guaranty  cannot  be  larger  than  the  principal  obligation, 
although  it  may  be  smaller.  The  guaranty  of  a  debt  for  an  in- 
fant or  a  married  woman,  which  is  at  first  accessorial,  may  be- 
come a  principal  debt  on  account  of  its  not  being  enforceable  at 

124 


.if 


VSi 


GUARANTY. 


125 


law  against  the  original  debtor,  but  may  be  enforced  against  the 
guarantor,  and  for  this  reason  a  guarantor  is  sometimes  required 
Generally,  however,  the  liability  of  the  guarantor  is  measured 
by  that  of  the  principal.  So  when  the  liability  of  the  debtor  is 
lessened  by  the  consent  of  the  creditor,  it  generally  lessens  the 
guarantor's  liability  in  the  same  ratio. 

«05.  Consent  of  the  Creditor.-The  consent  of  the 
creditor  to  accept  the  guaranty  must  come  to  the  knowledge  of 
the  guarantor  or  the  contract  will  not  be  binding.  An  offer  to 
become  a  guarantor  is  not  legally  binding  unless  the  party  to 
whom  It  IS  offered  signifies  his  acceptance.  But  there  will  be 
an  implied  acceptance  if  some  act  is  done,  on  the  strength  of 
the  guaranty,  by  the  party  to  whom  it  is  given  at  the  time  the 
offer  was  made. 

When  the  guaranty  is  absolute,  no  notice  of  acceptance  is  re- 
quired in  New- York,  unless  it  is  requested.  The  following  are 
common  forms  of  guaranty; 

390.    FoEM  Xo.  58. 

Buffalo,  May  4th,  1882. 
In   consideration  that  Mr.  .1.  Wells  will  supply   the  bearer, 
C.  Monroe,  with  groceries  not  to  exceed  the  value  of  twenty- 
five  dollars,  at  thirty  days  credit,  I  agree  to  be  responsible  for 
the  payment  of  the  same. 


R.  E.  SLOAN. 


397.    Form  No.  59. 


New-York,  Ajiril  1st,  1882. 
Mr.  O.  P.  GiBBS,— I  am  informed  by  C.  Green,  the  bearer,  that 
he  is  indebted  to  you  to  the  amount  of  foity-four  dollars  which 
becomes  due  to-morrow.  If  you  will  give  him  an  extension  of 
time  for  the  payment  until  the  second  day  of  May,  I  hereby 
guarantee  the  payment. 

DANIEL  WEBB. 

^98.  Liability  of  Principal  Varied.— Should  the  lia- 
bility of  the  principal  be  materially  varied  by  the  person  to 
whom  the  guaranty  is  given,  without  the  consent  of  the  guar- 


ifSli 


M 


]26 


COMMKR(  lAL    LAW    AND    BUSINESS    FORMS. 


antor,  the  liability  of  the  latter  would  be  terminated.  If,  for 
instance,  Mr.  Wells  should  supply  C.  Monroe  with  Jifty  dollars 
worth  of  groceries,  or  Mr.  Gibbs  should  extend  the  time  three 
months,  the  guarantor  would  not  be  liable^  And  where  a  party 
became  surety  for  the  faithful  performance  of  the  duties  of  a 
collector  of  taxes  for  a  certain  number  of  townships,  and  after 
the  bond  was  signed,  other  townships  were  added,  the  Supreme 
Court  of  the  United  States  held  that  the  surety  was  not  liable. 
So,  also,  where  a  person  was  surety  for  the  faithful  performance 
of  the  duties  of  a  cashier  in  a  partnership,  under  the  firm-name 
of  "  Smith  &  Co.,"  consisting  of  four  partners,  and  one  of  the 
partners  went  out  of  the  firm,  but  the  same  business  was  con- 
tinued under  the  same  name,  and  the  cashier  became  a  defaulter, 
it  was  held  that  the  surety  was  not  liable. 

290.  The  Statute  of  Frauds.— This  statute  enacts  that 
"No  action  shall  be  brought  whereby  to  charge  the  defendant 
ipon  any  special  promise  to  answer  for  the  debt,  default,  or 
miscarriage  of  another  person,  unless  the  agreement  upon  which 
such  action  shall  be  broufjht,  or  some  memorandum  or  note 
thereof  shall  be  in  writing,  and  signed  by  the  party  to  be 
charged  therewith,  or  some  other  person  thereunto  by  him  law- 
fully authorized."  The  general  provisions  of  this  act  apply 
directly  to  the  contract  of  guaranty.  And  where  a  person  rode 
a  horse  to  death  without  any  permission  from  the  owner,  and  A. 
verbal!}  guaranteed  to  pay  the  owner  a  sum  of  money  in  satis- 
faction of  the  loss,  on  condition  that  suit  should  not  be  brought 
against  the  offender,  it  was  held  to  be  a  promise  within  the 
statute,  and  therefore  void. 

300.  Liability  Renewed  or  Extended.— When  the  ob- 
ligation is  extended  by  law,  the  guarantor  will  be  discharged. 
As  where  a  joint  stock  company  was  incorporated  for  a  term  of 
ten  years,  and  was  at  the  expiration  of  that  time  renewed  for  ten 
years  more,  and  the  same  officers  and  business  go  on  as  before, 
the  sureties  to  the  bond  for  the  faithful  performance  of  the 
duties  of  the  cashier  were  held  not  to  be  bound  beyond  the 
oricrinal  time.  But  where  a  bond  is  given  for  the  faithful  per- 
formance of  the  duties  of  a  city  or  county  treasurer,  as  such. 


;4 


GUARANTY. 


127 


the  bond  continues  in  force  through  several  administrations, 
unless  the  sureties  are  formally  released,  because  the  office  never 
terminates.     A  guarantor  cannot  renounce  his  own  liability. 

301.  Negotiability  of  Guaranty.— When  a  general  guar- 
anty is  made  on  the  face  of  a  note  or  draft,  which  is  payable  to 
the  order  of  the  payee  or  to  bearer,  it  is  negotiable  with  the 
note  or  draft,  and  goes  with  it,  and  is  good  in  the  hands  of  any 
payee.  If,  however,  a  person  writes  on  the  hack  of  a  note, 
before  delivery  to  the  payee,  his  name  in  blank,  his  liability 
would  not  be  the  same  in  different  States.  In  some  he  would  be 
held  liable  as  a  surety,  but  in  New- York  he  would  be  held  as  an 
indorser,  and  it  would  be  the  safer  way  in  all  such  cases  to  notify 
such  parties  of  the  non-payment  if  it  is  not  paid  at  maturity. 

30a.  Guaranty  Strictly  Construed.— The  general  rule  in 

regard  to  the  construction  of  a  guaranty,  is  that  it  must  never 
be  extended  by  implication,  and  that  the  guarantor's  liability  is 
only  equal  to  that  of  the  principal,  and  is  limited  to  the  particu- 
lar transaction  in  regard  to  which  it  was  assumed.  If  it  is  special, 
and  relate  to  a  particular  person,  he  only  can  hold  the  guaran- 
tor liable,  and  he  is  not  bound  beyond  a  fair  construction  of  the 
terms  of  the  guaranty.  And  if  the  guaranty  relate  to  a  particular 
office,  it  embraces  only  such  things  as  properly  belonged  to  that 
office  at  the  time  the  guaranty  was  given.  As  where  a  bond 
was  given  as  security  for  a  collector  of  customs,  and  after  it 
was  given  7iew  duties  were  laid,  and  he  was  authorized  to  collect 
them,  it  was  held  that  the  bond  did  not  extend  to  the  new 
duties.  But  the  guarantor  will  be  bound  for  anything  which 
can  be  fairly  included  within  the  terms  of  the  contract. 

303.  Illustrations.— The  following  forms  are  given  as 
illustrating  the  difference  between  a  restricted  and  a  continuing 
guaranty: 

304.   Form  No.  60. 

"  The  object  of  the  present  letter  is  to  request  you,  if  con- 
venient, to  furnish  Messrs.  H.  with  any  sum  they  may  want  as 
far  as  $50,000.  We  shall  hold  ourselves  answerable  to  you  for 
the  amount."     Held  not  continuing. 


m 


Si  i 


i;t 


128 


COMMERCIAL    LAW    AND    BUSINESS    FUKMS. 

:i05.    Form  No.  61. 


"  I  agree  to  be  responsible  for  the  price  of  goods  purchased  of 
you,  either  by  note  or  account,  at  any  time  hereafter,  to  the 
amount  of  IllOO."  Held  to  be  a  continuing  guarantee  to  the 
extent  of  one  hun<lrtMl  dollars  for  goods  sold  at  any  time  before 
the  recall  of  the  credit. 

JIOO.    Form  No.  62. 

"  We  consider  Mr.  J.  V.  E.  good  for  all  he  may  want  of  you, 
and  we  will  indemnify  the  same."     Held  not  continuing. 

307.    Form  J^o.  63. 

*'  In  consideration  of  your  supplying  groceries  to  K,  at  two 
months*  credit,  I  agree  to  guarantee  his  present  or  any  future 
debts  to  the  amount  of  $00.  Should  he  fail  to  pay  at  the  ex- 
piration of  the  above  credit,  I  hereby  bind  myself  to  pay  you 
within  three  days  from  the  date  of  receiving  notice."  Held  to 
be  a  continuing  guarantee,  but  restricted  to  debts  already  con- 
tracted, and  to  debts  upon  the  credit  of  two  months, 

308.  Liability  of  Guarantor.— The  liability  of  the  guar- 
antor does  not  commence  until  the  debt  falls  due,  and  the  prin- 
cipal debtor  fails  to  pay.  And  he  will  not  then  be  liable  if  the 
debt  was  illegal  in  the  beginning.  Nor  will  he  be  liable  if  the 
principal's  indebtedness  was  conditioned  upon  the  performance 
of  some  act  to  be  done  by  the  creditor,  which  has  not  been  per- 
formed. Or,  if  the  surety's  lia})ility  was  dependent  upon  some 
condition  which  required  sometliing  to  be  done  by  the  creditor, 
which  had  been  neglected,  the  creditor  could  not  proceed  against 
him  until  the  thing  had  been  done.  As  if  it  had  been  agreed 
that  a  demand  should  be  made  upon  thr  surety  within  a  certain 
number  of  days  after  default  of  the  principal,  and  it  had  not 
been  made. 

:I09.  (  reditor's  Right  to  Securities.— Not  only  has  the 
creditor  a  right  to  proceed  against  the  surety  when  his  liability 
has  been  secured  by  the  default  of  the  principal  debtor,  but  he 
has  a  right,  also,  to  demand  from  him  any  securities  which  have 


it 


ifi 


.  i 


GUARANTY. 


129 


been  put  into  his  hands  to  indemnify  him  against  loss  if  called 
upon  to  pay. 

310.   Discharge  of  Guarantor.— Inasmuch  as   the  con 

tract  of  the  guarantor  is  made  without  benefit  to  himself,  there 
is  always  an  implied  agreement  on  the  part  of  the  party  to 
whom  the  guaranty  is  given  that  he  will  use  every  reasonable 
effort  to  enforce  payment  by  the  principal  debtor.  And  he  is 
bound  to  show  that,  in  this  respect,  he  has  performed  his  duty. 
The  guarantor  may  be  discharged:  First,  by  want  of  notice ; 
Second,  by  expiration  of  time;  Third,  by  alteration  of  contract  ; 
Fourth,  by  release;  Fifth,  by  merger;  Sixth,  by  givi^ig  time  to 
ths  principal;  Seventh,  by  fraud;  Eighth,  by  extinguishment, 

311.  Want  of  Notice.— If  the  guaranty  applies  to  trans- 
actions which  are  to  take  place  in  the  future,  and  requires  an 
acceptance  from  the  party  to  whom  it  is  given,  the  guarantor 
is  discharged  unless  such  notice  of  acceptance  is  given. 

312.  Expiration  of  Time.— Expiration  of  the  time  may 
work  a  discharge  of  the  guarantor  where  the  time  for  which  it 
was  undertaken  was  limited.  When  the  time  was  not  limited 
the  guaranty  can  be  terminated  by  giving  notice.  So,  also, 
where  the  time  was  not  limited  it  may  be  discharged  by  the 
operation  of  the  statute  of  limitations.  The  guarantor  may  also  be 
discharged  by  payment  made  either  by  the  principal  or  himself. 

313.  Alteration  of  Contract.— By  alteration  of  contract, 
if  made  without  his  consent,  whether  it  prejudice  his  interest  or 
not,  the  guarantor  will  be  discharged,  for  the  reason  that  he 
may  insist  upon  the  very  terms  of  the  agreement.  The  contract 
of  the  guarantor  being  dependent  upon  that  of  the  principal 
debtor,  if  he  is  discharged,  or  additional  time  is  given  him  with- 
out consent  of  the  surety,  the  guarantor  will  be  discharged. 

314.  Release.—Release  of  the  principal  will  discharge  the 
guarantor,  and  a  release  of  the  principal  may  sometimes  be  in- 
ferred, as  where  the  written  obligation  has  been  returned  to  the 
principal  debtor.  A  release  of  the  guarantor  does  not  release 
the  principal  debtor. 


i 


I* 


130 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


II 


IV 


315.  Merger. — A  merger  of  the  debt,  for  which  the  guar- 
anty was  given,  will  discharge  the  guarantor.  Where  the 
tt-uaranty  was  given  to  secure  the  payment  of  a  book  account, 
and  the  principal  debtor  gives  his  promissory  note  in  settlement 
of  the  account,  the  book  account  is  said  to  be  merged  in  the 
note,  and  the  guarantor  will  be  discharged.  Any  higher  security 
which  is  taken  to  secure  a  former  debt  is  said  to  merge  the 
former  debt  in  the  better  security;  that  is,  it  takes  up  or  de- 
stroys the  previous  debt,  and  creates  a  new  one. 

316.  Giving  Time. — If  the  creditor  give  the  debtor  more 
time  without  the  consent  of  the  guarantor,  it  will  discharge  the 
latter,  as  it  is  equivalent  to  an  alteration  of  the  contract. 

317.  Fraud.— The  concealment  of  some  material  part  of 
the  principal's  original  contract  from  the  surety  vitiates  and 
avoids  his  engagement.  "  If,  with  the  knowledge  or  assent  of 
the  creditor,  any  material  part  of  the  transaction  between  the 
creditor  and  his  debtor  is  misrepresented  to  the  surety,  the  mis- 
representation being  such  that,  but  for  the  same  having  taken 
place,  either  the  suretyship  would  not  have  been  entered  into  at 
all,  or,  being  entered  into,  the  extent  of  the  surety's  liability 
might  be  thereby  increased,  the  security  so  given  is  voidable  at 
law  on  the  ground  of  fraud." 

318.  Extinguishment.— The  liability  of  the  guarantor 
may  sometimes  be  terminated  by  reason  of  the  rights  of  the  cred- 
itor and  the  liabilities  of  the  debtor  becoming  united  in  the  same 
person  and  thus  extinguishing  both  the  rights  and  the  liabilities. 
If,  for  instance,  a  person  become  a  guarantor  for  a  principal 
debtor  whose  uncle  is  the  creditor,  and  the  uncle  dies,  leaving  the 
debtor  heir  to  his  estate,  the  debtor  then  becomes  creditor  for  the 
same  debt,  and  the  whole  thing  is  extinguished,  and,  therefore, 
the  guarantor  is  discharged. 

319.  Eights  of  Guarantor  Against  Creditor.— It  some- 
times happens  that  the  principal  debtor  puts  into  the  hands  of 
the  creditor  some  kind  of  property  to  secure  the  payment  of  the 
debt  for  which  the  guaranty  is  given.  In  that  case,  if  the  prin- 
cipal fail    to  pay,  the  guarantor  may  pay  the  debt  and  demand 


!»;. 


GUARANTY. 


131 


the  securities  which  were  held  as  a  pledge  by  the  creditor  if 
they  were  pledged  for  the  same  debt  that  he  became  liable  for 
And  this  he  may  do  whether  he  knew  there  were  any  securities 
at  the  time  he  became  guarantor  or  not. 

35JO.  Rig^hts  of  Guarantor  Against    Principal.-The 

guarantor  has  no  right  against  the  principal  debtor  until  the 
debt  falls  due,  and  the  default  of  the  debtor.  As  soon  as  the 
debt  becomes  due  he  may  immediately  pay  it,  and  take  the 
place  of  creditor,  and  become  possessed  of  all  his  ri<rhts  in 
regard  to  any  securities  the  creditor  may  have,  and  may  com- 
mence at  once  to  collect  the  debt  from  the  principal. 

wf^^\^'^'^'*'  ^^  ^''^  Guarantor  Against  Another.- 

Where  there  are  co-sureties  for  the  same  debt  they  are  each 
liable  for  the  whole  debt,  and,  if  the  creditor  collects  the  whole 
sum  from  one  surety,  that  surety  may  recover  from  each  of  the 
others  their  proportion  of  the  whole  debt. 

Form  No.  64. 
3Sa.  Guaranty  of  Rent. 

In  consideration  of  the  letting  of  the  premises  above  de- 
scribed, I  guarantee  the  punctual  payment  of  the  rent,  in  the 
above  agreement  mentioned  to  be  paid  and  performed  by  said 
lessee,  without  requiring  any  notice  of  non-payment,  or  proof  of 
notice,  or  demand  being  made  whereby  to  charge  me  therefor. 

(Signature.) 
Form  No.  65. 

323.  Guaranty  of  Collectibility. 

For  value  received,  I  hereby  guarantee  the  collectibility  of 
the  within  note.  ^ 

(Signature.) 
Form  No.  66. 

324.  Guaranty  of  Payment. 

For  value  received,  I  hereby  guarantee  the  payment  of  the 
within  draft. 

(Signature.) 


■ill 


LIEN. 


3^*1.  Lien. — A  lien  is  a  right  to  retain  i>roperty  until  the 
purchase  price,  or  some  charge  or  expense  due  upon  it,  is  paid. 
It  rests  upon  possession,  and  is  the  right  to  maintain  it.  If., 
therefore,  the  lien  holder  allows  the  goods  to  go  out  of  his  pos~ 
session,  he  loses  the  right.  Liens  may  be  either  legal  or  equit- 
able. The  seller  of  goods  has  a  legal  lien  upon  the  goods  sold 
for  the  purchase  price,  so  long  as  they  remain  in  his  possession. 
A  sale  of  goods  implies  that  payment  of  the  price  should  be 
made,  and,  unless  a  credit  was  agreed  upon,  the  buyer  cannot 
take  the  goods,  nor  sue  for  them  until  he  tenders  payment.  The 
seller  can  retain  the  goods  under  the  right  of  lien  until  tlie  price 
is  paid.  If,  however,  the  goods  are  sold  on  credit,  the  buyer 
may  take  possession  at  any  time,  but,  if  the  goods  are  not  taken 
until  the  payment  becomes  due,  the  seller's  right  of  lien  is 
revived.  So,  also,  if  before  delivery  of  the  goods  the  purchaser 
should  become  insolvent  the  right  could  be  exercised  by  the 
vendor. 

3*10.  Delivery  of  Part.— The  delivery  of  part  of  the 
goods  does  not  destroy  the  right  of  lien  on  the  remaining  part. 
The  rule  is,  that  every  part  of  the  goods  is  subject  to  lien  as 
long  as  it  remains  in  the  possession  of  the  vendor.  Even  where 
the  delivery  of  a  part  is  held  to  be  a  delivery  of  the  whole,  it 
does  not  destroy  the  right.  And,  if  a  part  of  the  purchase 
price  has  been  paid,  it  does  not  interfere  with  the  right  of  lien 
for  the  balance.  The  principal  also  has  the  right  of  lien  on 
goods  which  are  in  the  possession  of  his  factor,  or  of  a  person 
who  received  them  from  the  factor  if  he  was  notified  of  the 
claim.  Where  part  of  the  goods  have  been  delivered,  the  re- 
maining part  may  be  held  for  the  \chole  debt. 

132 


M 


LIEN. 


133 


;:i;i 


3ar.  An  Eqnitable  Lieu.— An  equitable  lien  may  be 
created  when  a  thing  is  not  in  existence,  but  is  expected  soon  to 
come  into  existence :  as  where  a  manufactory  is  leased,  and  the 
owner  is  to  be  secured  tlie  rent  by  a  lien  upon  the  articles  to  be 
manufactured,  the  lien  to  become  operative  as  soon  as  the  arti- 
cles are  produced.  The  party  who  claims  the  right  of  lien  is 
not  the  owner  of  the  property  upon  which  the  right  is  to  be  exer- 
cised; the  title  is  supposed  to  be  vested  in  some  other  person. 
Liens  may  exist  in  equity  without  actual  possession. 

3*28.    Lien  of  Agent.— An  agent  may  have  a  lien  upon  the 
property  of  his  princii>al  which  may  be  in  his  possession,  and  it 
may  be  either  a  general  or  a  special  lien.     The  general  lien  is 
the  right  to  hold  the  property  for  the  security  of  any  claim  he 
may  have  against  the  principal,  while  the  special  lien  is  for  some 
charge  or  claim  on  the  particular  goods  which  are  held.     The 
claim  may  be  for  services  rendered,  or  for  expenses,  or  money 
advanced,  or  for  a  balance  due  on  settlement.     The  lien  may 
result  from  an  agreement  between  the  parties,  or  from  the  usacre 
of  trade.     The  usage  of  trade  gives  factors  a  general  lien  for 
all  claims  which  arise  from  the  agency  business,  and  so  the  agent 
has  a  hen  for  all  liabilities  incurred  in  relation  to  the  ao-ency 
But  if  a  consignment  is  made  to  an  agent,  wath  particular  in- 
structions to  apply  the  proceeds  resulting  from  the  sales  to  the 
payment  of  a  particular  debt,  he  could  not  hold  the  money  by 
right  of  lien  to  indemnify  himself  for  a  balance  due  from  the 
principal. 

3?J9.  Lien  of  Mechanics.— In  most  of  the  States  mechan- 
ics have  a  lien  upon  the  property  upon  which  they  work  to 
secure  the  payment  of  their  w^ages.  But  there  are  certain  limi- 
tations and  requirements  in  regard  to  this  right,  concerninc- 
which  the  laws  of  the  different  States  are  not  entirely  uniform^ 
The  time  within  which  it  may  be  exercised  is  limited,  usually 
from  thirty  to  ninety  days.  In  some  States  the  work  must  be 
done  under  a  written  contract,  and  a  public  record  must  be  made 
of  it.  Some  require  a  written  notice  to  be  given  of  the  me- 
chanic's intention  to  exercise  the  right  of  lien.  These  conditions 
are  required  to  protect  the  owners  and  purchasers  of  the  prop- 


rH 


„S<  i 


134 


COMMERCIAL    LAW    AND    BUSINESS   FORMS. 


w 


erty  upon  which  the  work  lias  been  done  from  being  defrauded. 
If,  for  instance,  the  time  were  unlimited,  no  person  would  be 
safe  in  buying  property  and  paying  for  it,  as  he  might  be  sub- 
jected to  claims  of  any  amount  for  work  which  had  not  been 
paid  for  by  a  previous  owner. 

;|:J0.  Lieu  of  a  Coiiuiiou  Carrier.— The  common  carrier, 
by  reason  of  his  being  under  obligation  to  carry  goods  for  any 
person  who  may  offer  them  for  carriage,  is  given  the  right  of 
lien  to  secure  the  payment  of  the  charges  for  carriage.  His  lien 
is  of  the  nature  of  a  pledge,  and  he  may  not  only  hold  the 
goods  for  the  charges  upon  them,  but,  if  they  are  not  paid,  he 
may,  after  a  reasonable  time,  give  notice  that  the  goods  will  be 
sold,  and,  if  they  are  not  redeemed,  may  sell  a  sufficient  amount 
at  auction  to  indemnify  himself  for  the  charges. 

331.  Lien  of  Bailees.— A  bailee  who  performs  labor  and 
services  upon  the  property  of  the  bailor,  and  thereby  changes  its 
character  and  increases  its  value,  is  entitled  to  the  right  of  lien 
to  secure  the  payment  of  his  charges.  But  it  does  not  apply  to 
cases  where  money  and  services  have  been  expended  upon  the 
property,  but  no  changes  made  in  the  property.  The  keeper  of 
a  boarding  stable  has  no  lien  upon  a  horse  for  his  keeping.  But 
if  the  horse  has  been  trained  for  trotting  by  direction  of  the 
owner,  as  well  as  kept,  he  has  a  lien  for  his  charges 

33*2.  Lien  of  Innkeepers.— An  inkeeper  has  a  lien  upon 
the  luggage  of  his  guests  for  the  charges  for  their  accommoda- 
tions. But  he  has  no  lien  on  luggage  which  is  being  kept  for  a 
person  who  is  not  a  guest.  Neither  has  he  any  lien  on  horses 
which  are  sent  to  the  hotel  for  keeping  by  a  person  who  is  not  a 
guest. 

333.  Termination  of  Lien.— As  no  lien  can  exist  unless 
there  is  a  debt  or  claim  also  existing  at  the  same  time,  there- 
fore, if  the  debt  or  claim  is  paid,  or  a  credit  given,  the  lien  is  at 
once  terminated.  So,  also,  if  the  possession  of  the  goods  is 
voluntarily  surrendered,  the  lien  is  terminated.  The  debt  or 
claim  must  be  due  to  the  person  who  intends  to  exercise  the 
riffht  of  lien,  and  not  to  another.     If  when  a  party  has  the  right 


LIEN. 


135 


of  lien  he  does  not  assert  it,  but  claims  to  hold  the  property  on 
some  other  ground,  he  will  be  considered  to  have  waived  liis 
right  of  lien.  When  a  debt  is  secured  by  a  lien  upon  prop- 
erty, if  some  different  arrangement  is  made  for  paying  the  debt, 
the  lien  will  be  lost.  A  lien  is  immediately  destroyed  by  giving 
a  credit,  and  it  makes  no  difference  whether  it  was  given  by 
agreement  between  the  parties,  or  by  the  usage  of  trade. 

334.  The  Continuance  of   Lien.— A  lien,  when  in  full 

force,  will  continue  until  the  debtor  pays,  or  tenders  payment  to 
the  creditor,  or  until  the  property  is  voluntarily  given  up  by  the 
party  who  has  the  right  of  lien.  A  delivery  sufficient  to  pass 
the  title  of  the  property  may  be  made  without  losing  the  right 
of  lien,  as  where  an  entire  contract  of  sale  is  made  and,  a  por- 
tion of  the  goods  have  been  delivered,  the  effect  of  which  Mill 
be  to  transfer  the  title  to  the  whole,  but  the  right  of  lien  on  the 
balance  will  not  be  destroved. 


n 


COM^ION  CARRIERS. 


-♦♦-•- 


JI35.  Common  Carrier.— A  common  carrier  is  a  person 
who  undertakes  the  carriage  of  goods  from  one  place  to  another 
for  any  person  %vho  choses  to  employ  him  for  a  compensation. 
Express,  steamboat,  and  railway  companies,  cartmen,  canal-boat 
owners,  and  all  persons  whose  business  it  is  to  carry  goods  for 
the  public  for  hire,  are  common  carriers.  It  is  not  necessary 
that  the  compensation  should  be  a  definite  sum  ;  it  may  be 
according  to  the  amount  earned,  based  upon  a  scale  of  prices. 
But  it  must  be  when  earned  in  the  nature  of  a  debt,  recoverable 
at  law,  and  not  a  mere  gift.  Carriers  who  make  it  their  business 
to  carry  passengers  are  not  considered  as  common  carriers,  and 
are  not  liable  as  such,  except  in  respect  to  their  baggage.  There 
are  three  necessary  elements  to  constitute  a  common  carrier  ; 
First,  he  must  make  a  business  of  it ;  second,  he  must  carry  for 
all  people  indifferently  ;  and,  third,  he  carries  for  hire. 

3:J0.  Carries  for  All.— The  common  carrier  carries  for  all 
who  offer  goods  for  transportation  that  come  within  the  classes 
of  goods  which  he  is  engaged  in  carrying.  Thus  he  differs 
from  one  who  carries  only  by  special  contract,  and  does  not  hold 
himself  out  to  carry  indiscriminately  for  the  public.  He  is  not 
obliged  to  carry  goods  that  are  dangerous  nor  such  as  are  un- 
lawful. 

337.  Carries  for  Hire.— The  common  carrier  acts  upon 
the  principle  that  the  laborer  is  worthy  of  his  hire,  and  charges 
a  compensation  for  the  services  rendered,  and  for  the  risks  in- 
curred in  the  transportation  of  the  goods.  Generally,  he  has  no 
rii^ht  to  charge  one  person  any  more  than  another  ratably.  His 
charges  may  be  regulated  by  custom,  or  by  law%  or  by  agree- 
ment between  the  parties.  If  he  assume  extraordinary  risk,  his 
charc^es  may  be  correspondingly  high. 

136 


i  vh 


IS 


i-J 


COMMON    CARRIERS. 


137 


:I38.  standing  Offer  to  the  Public.— The  carrier  con- 
tinually holds  out  to  the  public  an  offer  to  receive  goods  for 
^transportation,  and  he  has  no  right  to  refuse  to  take  goods  from 
any  one  if  they  come  within  the  line  of  goods  he  carries,  and  he 
still  has  means  of  conveyance.  If  he  refuses  to  accept  goods 
when  offered,  except  for  the  reason  of  inability  to  carry,  or  not 
being  of  the  class  of  goods  carried,  he  makes  himself  liable  to  an 
action  for  damages.  If,  however,  the  owner  of  the  goods  in- 
tend to  bring  an  action  for  damages,  he  must  tender  to  the 
carrier  the  charges  for  transportation,  for  the  reason  that  the 
carrier  is  not  legally  bound  to  receive  the  goods  unless  the 
freight  is  prepaid.  Nor  is  the  carrier  under  obligation  to  re- 
ceive freight  an  indefinite  length  of  time  before  he  is  ready  to 
start  upon  its  carriage. 

339.  Private  Carrier.— A  private  carrier  is  one  who 
makes  special  contracts  for  the  transportation  of  goods  for  hire, 
or  carries  for  certain  individuals  only,  and  has  a  right  to  refuse 
to  carry  for  any  others  who  may  offer  goods  for  conveyance. 
If  his  occupation  is  such  that  he  has  no  right  to  refuse  any  per- 
son, then  he  is  a  common  carrier.  A  mere  carriage  for  hire,  in 
any  particular  case  where  it  is  out  of  the  usual  line  of  his  busi- 
ness, does  n'ot  make  one  a  common  carrier,  unless  there  is  an 
agreement  between  the  parties  that  he  shall  assume  the  respon- 
sibility and  liability  of  a  common  carrier.  A  private  carrier  is 
only  liable  as  an  ordinary  bailee  for  hire,  and  is  only  responsible 
for  ordinary  diligence. 

3  10.  Liability  of  Common  Carrier.— The  liability  of 
the  common  carrier  begins  as  soon  as  the  goods  have  been  com- 
pletely delivered  to  him  ;  and  the  acceptance  of  the  goods  for 
transportation,  at  any  place  by  the  carrier,  fixes  his  liability. 
An  acceptance  of  some  kind  is  indispensable  to  fix  the  liability; 
therefore,  if  the  goods  are  in  charge  of  the  owner  when  lost| 
the  carrier  will  not  be  liable.  When  the  goods  are  fully  ac- 
cepted by  the  carrier,  he  assumes  the  responsibility  of  an 
insurer,  and  is  liable  for  all  losses  unless  they  happen  from  inevi- 
table accident,  or  from  public  enemies,  or  from  perils  of  the  sea 
or  from  what  is  called  an  act  of  God.     "  An  act  of  God  "  means 


138 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


COMMON    CARRIERS. 


13P 


If 


1  ilHfci 


some  act  in  which  neither  the  carrier  nor  any  other  person  had 
any  direct  and  immediate  agency.  But  a  person  may  be  a  com- 
mon carrier  in  respect  to  some  things,  and  a  private  carrier  in 
respect  to  others  ;  thus,  his  principal  business  may  be  confined 
to  carrying  goods,  yet  at  times  he  may  carry  a  package  of 
money  for  a  friend  or  neighbor,  and,  in  that  event,  he  will  only 
be  responsible  for  want  of  ordinary  care  in  relation  to  the 
money,  while,  if  it  were  a  part  of  his  regular  business,  he  would 
be  liable  as  a  common  carrier.  He  is  also  liable  for  all  losses 
which  result  from  the  acts  of  his  own  servants,  even  if  he  take 
every  possible  precaution  to  avoid  such  losses.  If  goods  are 
lost,  the  presumption  is,  that  it  resulted  from  his  carelessness, 
and  he  can  only  avoid  liability,  by  proving  that  the  loss  came 
within  one  of  the  cases  which  exempts  him  from  the  liability. 

till.  Acceptance  of  Goods. — The  carrier's  liability  does 
not  begin  until  the  goods  have  been  delivered  to  him  or  to  his 
agent,  and  have  been  accepted.  But  the  acceptance  may  be 
either  actual  or  constructive.  When  the  goods  for  carriage 
are  left  at  the  proper  place,  and  the  carrier  is  notified  of  the 
fact,  it  is  a  sufficient  delivery  to  hold  him  responsible  ;  but 
not  unless  the  carrier  or  his  agent  has  knowledge  of  the  fact  of 
the  goods  being  left.  Generally,  when  the  goods  are  delivered, 
the  common  carrier  acknowledges  the  delivery  and  acceptance 
of  the  goods,  by  giving  a  receipt,  as  on  following  page. 

ai'S.  Liability  of  Successive  Coiiipaiiies.— A  question 

of  much  importance  frequently  arises  in  regard  to  the  liability 
for  loss  where  there  are  successive  companies  of  common  car- 
riers over  a  continuous  route  of  travel,  but  each  a  separate  and 
independent  company.  For  instance,  goods  are  shipped  froiu 
Buffalo,  N.  Y.,  to  New  Orleans,  and  there  are,  say,  four  separate 
railroad  companies,  and  the  goods  are  lost  in  the  hands  of  the 
third  company.  Is  the  company  which  received  the  goods  at 
Buffalo  liable,  or  only  the  third  company  in  whose  hands  they 
were  lost?  The  statute  law  of  New- York,  passed  in  relation  to 
railway  carriers,  makes  the  receiving  com])any  liable  to  the 
owner,  and  gives  it  the  right  to  collect  from  the  company  which 
lost  the  goods. 


«  a  '~ 


c^  S.  2:.  ^  J=^  i^-  §^  ^  ^• 

f-v    *>    •^    te  -^    ^     ^ 

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Ok 


<i    S"S    <^?^    k^^.  ^'^ 


66 


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f^     ^     C!     <^  ^^     "'^  *»■     Co 

o  a  a  !:»  a"^  §  ^ 
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o  ^  S  ^  S  *i  '-•s?^. 

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140 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


umm 


ililHI 


344.  Care  of  Goods. — It  has  already  been  stated  that  the 
comraon  carrier  is  an  insurer  of  the  safety  of  the  goods.  He 
must  receive  them  at  suitable  times,  and  in  a  proper  way,  and  at 
a  suitable  place.  He  is  also  bound  to  comply  with  such  reason- 
able and  suitable  instructions  as  the  owner  may  give,  as  where  a 
package  is  marked  "  glass — with  care — this  side  up,"  he  is  bound 
to  comply  with  the  directions.  So,  if  a  package  is  marked,  "  to 
be  kept  dry,"  the  instructions  must  be  followed  ;  the  goods 
must  be  carried  in  the  manner  and  position  indicated  by  the 
notice.  He  must  exercise  more  than  ordinary  care  over  the 
goods  while  in  course  of  transportation  ;  he  must  take  the 
best  of  care,  not  only  during  the  carriage,  but  at  intervals  of 
stopping  during  the  transportation,  and  until  the  goods  are 
delivered.  He  must  also  provide  suitable  vehicles  for  the  con- 
veyance of  the  goods,  and  keep  them  in  proper  repair,  and 
must  employ  capable  servants  to  take  charge  of  them.  Must 
not  expose  the  goods  to  irai)roper  danger ;  and  if  he  receive  any 
reasonable  and  proper  special  instructions  from  the  sender,  and 
does  not  obey  them,  and  the  goods  are  lost,  even  by  perils  of 
the  sea,  he  is  bound  to  prove  that  the  loss  did  not  result  from 
his  disobedience  of  the  instructions. 

34»j.  Restricted  LiabiHty. — The  strictness  and  the  seve- 
rity of  the  liability  to  which  the  common  carrier  is  held  have 
caused  many  attempts  to  limit  or  restrict  it.  This  has  generally 
been  attempted  by  giving  notice  to  the  owner ;  for  instance,  as 
"  all  baggage  is  at  the  risk  of  the  owner."  The  courts  have 
held  that  such  notice  does  not  restrict  the  liability.  But  the 
carrier  can  make  a  special  contract  with  the  other  party,  in 
which  he  may  restrict  his  common  law  liability  as  insurer  of  the 
goods,  but  he  cannot  escape  them  as  bailee  ;  as  such,  he  will  be 
responsible  for  want  of  proper  care.  He  may,  however,  limit 
his  liability,  by  giving  a  general  notice  that  the  goods  shall  be 
delivered  in  some  particular  way,  and  that  the  value  of  the 
goods  shall  be  made  known,  and  that  he  will  not  be  answerable 
for  goods  above  a  certain  price,  unless  a  higher  price  is  j)aid  for 
the  carriage.  The  policy  of  the  law  is  to  hold  the  carrier  strictly 
accountable  for  any  neglect  or  loss  to  the  goods  carried. 


COMMON    CARRIERS. 


141 


346.  Termination  of  Liability.— The  carrier's  liability 
terminates  when  the  goods  are  properly  delivered  at  the  place 
of  destination  to  the  consignee,  at  the  specified  time  ;  or,  if  no 
time  is  specified,  within  a  reasonable  time.  The  contract  to 
deliver  is  sometimes  suspended  by  an  unavoidable  obstacle,  as  the 
freezing  up  of  a  canal,  but  if  the  carrier  has  used  all  reasonable 
efforts  to  overcome  the  obstacle,  the  law  will  excuse  him,  and  he 
may  deliver  when  the  canal  is  again  open  for  navigation. 

347.  Place  of  Delivery. — The  delivery  may  be  made  to 
the  consignee  at  his  place  of  business,  or  at  a  general  ware- 
house, or  on  board  a  lighter,  or  on  a  wharf,  or  dock,  if  there  is  a 
well-established  custom  of  that  kind  of  delivery  at  the  place, 
but  notice  must  generally  be  sent  previously  to  the  consignee  or 
owner.  If  any  particular  place  for  delivery  is  agreed  upon,  it 
must  be  at  that  place.  If  the  consignee  refuse  to  accept  the 
goods,  the  carrier  must  take  care  of  them,  or  have  them  stored 
in  some  suitable  place  for  the  owner. 

348.  Delivery  to  Right  Person.— The  carrier  w411  not  be 

discharged  of  his  liability  until  the  delivery  is  made  to  the  right 
person,  who  is  commonly  the  consignee.  If  delivered  to  any 
other  person  by  mistake,  the  carrier  will  be  responsible  as  for  a 
conversion  of  the  property.  The  delivery  may  be  made  per- 
sonally to  the  consignee,  or  to  his  authorized  agent.  If  the  con- 
signee is  dead,  or  cannot  be  found  after  due  diligence,  then  the 
carrier  will  be  discharged  from  further  liability  by  storing  the 
goods  with  some  proper  person  on  the  owner's  account. 

349.  Warehouseman. — When  the  goods  have  been  deliv- 
ered to  a  warehouseman  the  liability  of  the  carrier  ceases  and 
that  of  the  warehouseman  begins.  The  latter  is  not  liable  as 
insurer,  but  only  as  bailee,  and  is  only  responsible  for  want  of 
ordinary  care.  And  even  where  the  warehouse  is  owned  by  the 
carrier  the  effect  of  delivery  is  the  same. 

350.  Person  to  Pay  Freight.— The  carrier  may  demand 
prepayment  of  charges  for  freight  if  he  choose,  but,  in  most 
cases,  it  is  customary  to  carry  the  goods  and  collect  the  freight 


,61 


J  42 


COMMERCIAL    LAW    AND    UUSINJlSS    FuKMS. 


from  the  consignee.  If  the  consignee  refuse  to  pay  the  freight, 
or  price  of  freight,  the  carrier  has  two  means  of  collecting' it: 
First,  the  carriage  gives  him  a  property  interest  in  the  goods 
which  entitles  him  to  the  right  of  lien  the  same  as  if  the  goods 
were  pledged  to  him  as  security  for  the  payment  of  the  freight  • 
second,  he  has  a  right  to  bring  an  action  in  a  court  of  law 
against  the  owner  of  the  goods  with  whom  he  made  the  con- 
tract  for  the  carriage,  by  proceeding  against  him  personally. 

»51.  Lien  of  Carrier.— This  means  the  right  to  hold  and 
keep  possession  of  the  goods  carried  until  payment  of  the 
freight,  and,  when  he  is  unable,  after  due  diligence,  to  deliver 
the  goods  to  the  consignee,  and  deposits  them  in  a  warehouse, 
the  deposit  is  subject  to  the  lien.  If  the  carrier  claim  to  hold 
the  goods  for  some  other  purpose  than  as  security,  he  will  lose 
his  right  of  lien,  and  so  he  will  if  he  voluntarily  give  up  the 
goods  for  any  reason.  If  he  assume  to  own  the  goods,  or  ap- 
plies them  to  his  own  use,  he  is  guilty  of  a  conversion  of  them. 
If  the  freight  is  not  paid  within  a  reasonable  length  of  time 
after  it  is  due,  and  has  been  demanded,  the  carrier  may  apj)ly  to 
a  court  of  equity  for  a  decree  of  sale,  and  the  court  will,  on  due 
proof,  cause  the  goods  to  be  sold  and  decree  payment  to  the 
carrier  after  payment  of  the  costs  and  expenses,  and  retain  any 
surplus  for  the  benefit  of  the  owner.  Unless  expressly  author- 
ized by  the  court,  the  carrier  cannot  buy  the  goods  or  any  part 
of  them  at  the  sale. 


SHIPPING 


-»•» 


3o^.    Shipping. — The  meaning  of  shipping  as  used  here  is 

the  transportation  of  goods  by  water,  whether  carried  upon  the 

ocean,  the   lakes,  rivers,  or  canals.     The   immense   amount   of 

transportation  carried  on  by  ships   and   boats  of  various  kinds 

makes  it  important  to  understand  the  principles  of  law  which 

relate  to  and  govern  the  shipment  and  carriage  of  goods  by  water. 

The  transportation  of  goods,  whether  by  land  or  by  water,  usually 

comes  within  the  scope  of  the  common  carrier,  and  is  treated  of 

generally  under  that  head.     The  principal  parties  concerned  in 

the  transportation  of   goods  by  water  are,  first,  the  owners  of 

ships   or  boats;   and,  second,  the   owners   of    the   goods   to   be 

carried. 

3o«t.  Ship  Owner. — The  owner  of  a  vessel  does  not  always 
run  it  himself,  nor  is  it  always  run  in  his  interest  as  a  common 
carrier.  Frequently  ships  are  let  to  other  parties,  who  use  them 
to  carry  goods  for  the  public,  and  thus  they  become  common 
carriers. 

When  a  ship  is  so  let,  or  leased,  it  is  said  to  be  chartered,  and 
the  contract  by  which  a  ship  is  chartered  is  called  the  charter- 
party.  This  contract,  or  charter-party,  is  a  written  instrument 
(generally  partly  printed  and  partly  written)  by  which  the 
vessel,  or  part  of  it,  is  let  or  leased,  either  to  the  owner  of  the 
goods  to  be  shipped,  or  to  a  middle  man,  who  intends  to  carry 
the  goods  for  the  owner.  The  party  who  hires  the  vessel  is 
called  the  charterer. 

354.  Owner  of  Goods.— The  owner  of  goods  to  be  shipped 
may  charter  the  whole,  or  only  a  part  of  a  vessel,  as  the  case 
may  be,  and  it  may  be  for  the  season,  or  only  for  a  particular 
voyage.  If  the  whole  ship  is  chartered  for  the  season,  the  char- 
terer generally  employs  the  ofiicers  and  the  crew,  and  has  the 

143 


( 


144 


COMMEia  lAL    LAW    AM)    BUSINESS    FORMS. 


fW 


entire  control  and  responsibility  of  the  vessel,  and  for  the  time 
is  deemed  the  owner.  But  mucli  of  the  sliii)i>ing  by  lake,  river, 
and  canal  is  carried  on  by  season  contracts,  whereby  the  owners 
of  boats  covenant  to  run  through  the  season  between  certain 
points,  and  carry  all  goods  that  may  be  specified  in  a  bill  of 
lading,  with  certain  exceptions,  at  specified  rates. 

:I55.  Charter-Party.— The  charter-party  embraces  a  con- 
tract which  is  defined  to  be,  "  tliat  by  which  an  entire  sliip,  or 
some  part  thereof,  is  let  to  a  mereliant,  or  some  other  person,  for 
the  conveyance  of  goods,  on  a  determined  voyage  to  one  or 
more  places."  This  instrument  (the  charter-party)  is  generally 
made  by  the  owner  of  the  vessel,  but  may  be  made  by  his 
authorzied  agent,  and  is  sometimes  made  by  the  master  of  the 
vessel.  The  terms  of  the  charter-party  are  to  be  strictly  en- 
forced, and  cannot  be  varied  by  parol.  A  clause  is  generally 
inserted,  exempting  the  owner  from  liability,  when  a  portion  of 
the  vessel  is  chartered,  provided  he  cannot  fulfil  his  contract,  by 
reason  of  circumstances  over  which  he  has  no  control.  If  the 
charter-party  is  for  a  single  voyage,  it  generally  provides  that 
the  ship  shall  be  in  good  condition,  and  seaworthy,  ready  to  sail 
on  a  specified  day.  It  usually  describes  the  voyage  which  is  to 
be  performed,  and  the  time  to  be  allowed  for  discharging  the 
cargo,  and  stipulates  the  amount,  or  rate,  to  be  paid  for  freight. 

5loO.  Oeiieral  Ship.— When  a  ship  is  not  chartered,  but 
carries  goods  for  the  public  generally,  it  is  called  a  general  shij). 
It  is  usual  to  advertise  such  ships  as  being  open  and  ready  for 
the  transportation  of  freight.  It  offers  to  take  goods  for  any 
one  and  every  one,  as  far  as  it  has  capacity,  without  partiality. 
Such  a  ship  is  a  common  carrier,  an<l  has  no  right  to  refuse  to 
carry  goods  for  any  one  if  they  are  such  goods  as  are  usually 
carried,  and  there  is  still  room  for  conveyance. 

The  rights  and  liabilities  of  the  owners  of  a  general  ship  are 
the  same  as  those  of  a  railroad  company  or  any  other  common 
carrier. 

JI.IT.  Uill  of  Lading.— When  a  contract  has  been  made 
with  a  general  ship  for  the  transportation  of   goods,  it  is  em- 


SUIPPING. 


145 


bodied  in  a  bill  of  lading,  which  is  made  out  and  signed  by  the 
master  of  the  vessel.  The  bill  of  lading  is  a  receipt  for  the 
delivery  of  the  goods,  and  a  contract  between  the  master  of  the 
vessel  and  the  shipper  of  the  goods  for  their  carriage.  It  is 
customary  to  make  out  three  bills,  one  of  which  is  marked 
original  the  other  two  being  duplicates.  These  three  bills  consti- 
tute but  one  contract,  but  the  bills  are  each  for  a  particular 
person;  one  is  for  the  shipper,  one  for  the  master  of  the  vessel, 
and  the  other  for  the  person  to  w^hom  the  goods  are  sent,  called 
the  consignee.  As  we  have  already  seen  under  negotiable  paper, 
a  bill  of  lading  is  transferable  by  indorsement,  and  is  often  used 
as  collateral  security  for  a  loan  of  money.  The  shipper,  called 
consignor^  to  whom  the  bill  is  sometimes  made  out,  may  trans- 
fer it,  and  when  so  transferred,  for  value,  it  passes  the  title  in  the 
property  to  the  indorsee. 

The  power  to  transfer  the  title  of  the  goods  by  an  assignment 
of  the  bill  of  lading  remains  to  the  shipper  as  long  as  the  prop- 
erty is  in  the  hands  of  his  agent,  or  a  common  carrier. 

358.  Duties  of  Ship-owner.- Xot  only  must  the  owner 
of  the  ship  or  vessel  see  that  she  is  tight,  staunch  and  strong, 
fit  for  the  voyage,  but  he  is  under  obligation  to  keep  her  so 
during  the  voyage.  He  must  also  supply  the  ship  with  a  suita- 
ble crew,  and  capable  officers,  and  must  see  that  she  is  duly  pro- 
visioned, and,  when  it  is  customary,  he  must  employ  a  pilot. 
He  must  also  see  to  the  careful  stowage  of  freight,  and  exer- 
cise due  care  over  it  during  the  voyage.  If  it  is  injured  by  im- 
proper stowage  he  will  be  liable.  The  master  must  also  have 
on  board  the  proper  manifest  and  other  documents  necessary  for 
the  protection  of  the  vessel.  He  must  deliver  the  goods  in  the 
customary  manner  and  at  the  proper  place. 

359.  Duties  of  the  Merchant.— The  merchant  (or  owner 
of  the  goods)  must  have  the  goods  ready  for  shipment  at  the 
proper  time.  He  is  also  sometimes  required  to  pay  primage, 
which  is  a  small  customary  payment  to  the  master  for  his  care 
and  trouble.  Freight  is  said  to  be  the  price  of  carriage,  and 
therefore  is  not  due  until  the  carriage  is  completed.  But  if  pre- 
paid, and  the  goods  are  not  carried,  by  reason  of  any  event  not 


) 


146 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


! 


imputal)le  to  the  shipper,  it  is  to  be  repaid,  unless  there  is  a 
special  agreement  to  the  contrary.  Where  goods  are  sent  in  a 
general  ship,  the  amount  of  freight  depends  upon  the  agreement 
of  the  parties,  or  the  value  of  the  services  performed,  estimated 
according  to  the  custom  in  such  cases.  The  carrier  has  a  lien 
upon  the  goods  until  the  freight  is  paid. 

300.  MiiritiniO  Loan.- -When  a  vessel  meets  with  an  un- 
foreseen disaster  which  necessitates  a  loan  of  money  in  order  to 
complete  the  voyage,  the  law  confers  upon  the  master  unusual 
privileges,  and  gives  him  the  right  to  pledge  the  ship,  and  some- 

.  times  the  cargo,  also,  to  raise  the  necessary  funds.  This  is  done 
by  giving  a  bond  for  the  repayment  of  the  money,  either  upon 
the  ship,  or  the  cargo,  or  both.  If  it  is  given  on  the  ship,  it 
is  called  a  bottomry  bond  ;  when  given  on  the  cargo,  it  is  called 
a  respondentia  bond.  These  loans  can  only  be  made  in  cases  of 
real  necessity.  The  bond  is  a  mortgage  upon  the  ship,  and 
where  after  one  loan  it  becomes  necessary  to  make  a  second 
one  on  the  ship  for  the  same  voyage  in  order  to  complete  it,  the 
second  mortgage  has  the  first  lien  or  claim  for  payment,  on  the 
ground  that  the  first  could  not  have  been  paid  unless  the  second 
had  been  made.  The  repayment  of  the  loan  depends  upon  the 
voyage  being  completed,  and  the  safe  arrival  of  the  vessel. 
The  lender  takes  all  the  risk  of  the  voyage,  but  the  loan  must 
be  necessary,  or  he  has  no  security. 

301.  Ueneral  Average.— When  a  ship,  which  is  heavily 
laden,  is  caught  out  at  sea  in  a  severe  storm,  it  sometimes 
becomes  necessary  to  cast  overboard  some  portion  of  the 
cargo  in  order  to  save  the  rest.  In  such  case  where  goods  are 
lost  for  the  j^^reservation  of  the  rest,  the  owner  of  the  goods  lost 
is  indemnified  by  contribution  ;  each  portion  of  the  cargo  pay- 
ing its  respective  part  according  to  its  value,  and  the  assessment 
which  is  made  upon  all  the  property  which  was  at  risk  according 
to  its  valuation,  is  called  general  average.  There  can  be  no  gen- 
eral average  unless  the  whole  property  was  in  jeopardy,  and  the 
loss  or  injury  must  be  for  the  good  of  all,  and  it  must  be  volun- 
tarily incurred.  The  principle  of  general  average  is  just  and 
reasonable.     All  the  property  at  risk,  including  the  ]>art  which 


^  Jt  <  fi;, 


SHIPWNG. 


147 


was  lost,  pays  its  proper  share  towards  making  up  the  loss 
10  bring  any  case  within  the  rules  of  general  average  there 
must  :  First,  be  a  necessity  for  the  sacrifice;  second,  it  must  be  a 
dehberate  and  voluntary  act  of  the  master  of  the  ship ;  and 
third,  It  must  be  for  the  ge,ieral  good.  When  the  necessary 
conditions  have  been  fulfilled,  the  ship,  freight,  and  cargo  must 
contribute  in  their  respective  proportions  to  indemnify  for  the 
loss.  A  general  average  confers  a  lien  upon  the  parcels  of 
cargo,  ship,  etc.,  on  which  it  is  charged. 

»6a.  Contributing  Interests.— Not  all  the  property  at 

risk  IS  assessed;  provisions  are  exempt,  and  wearing  apparel  and 
jewelry  of  passengers ;  only  freight-paying  goods  contribute. 
VV  hen  the  settlement  is  made  at  the  port  of  destination,  the 
goods  lost  are  estimated  at  their  value  there,  and  so  with  the 
contributing  property;  the  ship  is  valued  at  what  it  was  worth 
before  it  started,  less  the  wear  of  the  voyage.  The  custom  is  to 
make  out  a  list  of  the  articles  that  are  to  contribute,  ineludin<r 
the  lost  property,  and,  also,  an  account  of  the  losses;  these  are 
placed  in  the  hands  of  an  average  broker  who  makes  the  ad- 
justment. 

363,    Salvage.— Salvage  is  a   compensation   made   by  the 
owners  of  a  ship,  or  of  goods,  to  some  person  or  persons,  for 
saving  the  property  from  impending  peril,  or  for  recovering  it 
after  being  lost.     Generally,  large  compensation  is  allowed  in 
such  cases  to  induce  persons  (sometimes  called  wreckers)  to  incur 
danger -oftentimes  very  great -in  tlieir  efforts  to  save  prop- 
erty.     Ihe  justice   and   policy   of    making   large   awards   for 
incurring  such  peril  has  been  acknowledged  by  all  nations      A 
person  may  be  entitled  to  salvage,  either  by  rescuing  propertv 
from  penis  of  the  sea,  or  from  the  hands  of  an  enemy.     If  I 
ship  IS  abandoned  at  sea,  and  is  afterwards  brought  into  port  bv 
another  party,  he  is  entitled  to  salvage,  and  has  a  right  of  lien 
on  the  property  to  secure   his  compensation,  which   is  called 
sahape.     1  he  amount  of  salvage  is  regulated  by  the  amount  of 
1-isk  incurred,  and  is  generally  from  one-fourth  to  one-half  the 
value  of  the  pru].erty  saved. 


i 


;-    l*«    ' 


i  • 


148 


CUMMEIU  lAL    LAW    AND    BUSINESS    FORMS. 


IIP! 


II 


Form  No.  68. 

:i04.  Charter  Party,  Oiviug  Possession  to  the  Hirer 

^hCSC  ^VticlC5  of  ^QVCi:\n^ntf  made  and  efitercd 
into  thisjirst  da*/  of  July,  1882,  by  and  between  Smith  Davis,  of 
Chicago,  ofthefrstpart,  and  Robert  Owen,  of  the  City  of  Cleve- 
land, of  the  second  part,  witnesseth :  the  said  party  of  the  first 
part  has  this  day  chartered  aiid  hired  unto  the  said  party  of  the 
second  part,  the  propeller  Dakota,  of  Chicago,  and  of  the  burden 
of  500  tons  or  thereabouts,  with  cdl  the  appurtenances,  cables, 
anchors,  chains,  etc.,  lohich  belong  to  said  propeller,  for  the  term 
of  four  months  from  the  loth  day  of  July,  to  be  delivered  at  the 
port  of  Cleveland.     But  in  case  the  said  Smith  Davis  shall  deliver 
the  said  propeller  at  any  time  before  the  said  day,  the  said  term 
shall  take  date  from  the  time  of  delivery.     For  the  use  of  said 
propeller,  said  Robert  Oicen  agrees  to  pay  the  said  Smith  Davis 
six  thousayid  dollars,  as  follows:     On   the  first   of  September, 
October  and  Noveinber,  each,  two  thousand  dollars.     It  is  further 
understood  that  the  said  Robert  Oicen  shall  be  at  all  the  expense 
of  tnanning  and  furnishing  said  boat  for  the  time  above  stated 
and  shall  return  the  same  to  the  said  Smith  Davis  at  the  port  of 
Chicago  in  as  good  condition  as  it  now  is,  with  the  exception  of 
the  ordinary  use  and  wear;  and  if  the  said  Robert  Owen  shall  at 
any  time  refuse  tofdfiU  on  his  part,  the  said  Smith  Davis  shall 
have  the  right  to  take  possession  of  the  said  boat  icherever  the 
same  may  be  found. 

%\\  "SBlitUCSS  ^IhCVCOfr   ^pe  have  this  day  set  our 
hands  and  seals. 


^tU'C'-n. 


'^  ^^  •■  K'. 


STOPPAGE  m  TRANSITU. 


363.  Stoppage  in  Transitu.— This  is  a  peculiar  right, 
similar  in  its  nature  to  the  right  of  lien,  which  is  given  to  the 
vendor  of  goods  which  have  been  sold  and  sent  to  a  purchaser 
at  a  distance,  and,  after  the  goods  are  sent,  he  finds  that 
the  buyer  has  become  insolvent;  it  enables  him  to  stop  the 
goods  any  time  before  they  get  into  the  possession  of  the  pur- 
chaser. This  is  called  the  right  of  stoppage  in  transitu.  It 
depends  upon  conditions  which  must  occur  to  give  it  elffect.  It 
is  the  right  which  the  law  gives,  under  certain  circumstances,  to 
retake  possession  of  goods  which  have  gone  out  of  the  posses- 
sion of  the  vendor.  It  is  an  extension  of  the  right  of  lien,  as  it 
were.  If  the  goods  still  remained  in  possession  of  the  vendor, 
the  right  of  lien  could  be  exercised,  but,  having  gone  out  of  the 
vendor's  hands,  but  not  having  reached  the  hands  of  the  vendee, 
the  seller  has  the  right  to  stop  the  goods  and  hold  them  for 
security. 

366.  Necessary  Conditions.  — To  give  the  vendor  this 

right,  the  law  requires  that  the  following  conditions  shall  subsist, 
namely  :  First,  the  insolvency  of  the  purchaser;  Secojid,  the 
goods  must  be  in  the  hands  of  a  common  carrier,  in  transit,  in 
conveyance  from  the  vendor  to  the  vendee;  and.  Third,  the  pur- 
chase price  of  the  goods  must  remain  unpaid.  This  right  is 
derived  from  the  credit  system  of  doing  business,  and  exists 
only  between  the  vendor  and  the  vendee.  A  person  who  has 
guaranteed  the  payment  for  the  goods  has  no  right  of  stoppage. 

367.  The  Tendor.— The  general  rule  is  that  the  vendor  is 
the  only  person  who  can  exercise  this  right,  but  it  is  only  neces^ 
;^ary  that  he  should  be  substantially  the  vendor;  he  may  be  the 
immediate  but  not  the  ultimate  vendor.  As  where  A.  receives 
an  order  for  goods,  and,  not  having  them,  buys  them  of  another 

149 


I 


i     I! 


O 

N 


loO 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


' 


person  on  his  own  account  and  ships  them  to  the  person  who 
ordered  them,  he  has  a  right  to  stop  the  goods  in  tra7isitu. 
So  when  a  person  sends  goods  to  be  sold  on  joint  account  of 
himself  and  the  consignee,  he  has  the  right  of  stoppage.  But 
when  money  or  goods  are  sent  to  pay  a  debt  they  cannot  be 
stopped. 

* 

368.  The  Insolyency. — One  of  the  necessary  conditions 
to  the  existence  of  this  right  is  the  insolvency  of  the  vendee, 
but  it  need  not  be  a  complete  bankruptcy  or  formal  insolvency; 
it  is  only  necessary  that  there  should  be  an  inability  to  pay  his 
debts.  A  well  founded  report  that  he  cannot  pay  his  debts,  or 
the  fact  of  his  acceptances  being  dishonored,  is  generally  suffi- 
cient cause  for  exercising  the  right  of  stoppage.  But  the  con 
tract  is  not  entirely  broken  up  if  the  vendor  does  exercise  the 
rifijht  of  stoppage;  the  vendee  has  the  right  to  reclaim  the 
goods  by  paying  the  price,  or  tendering  payment.  So,  also,  if 
the  agreement  was  to  sell  the  goods  on  credit  without  security, 
and  there  is  good  cause  for  the  stoppage,  the  vendor  may  demand 
either  payment  or  good  security.  The  act  of  stopping  the  goods 
is  always  exercised  on  the  vendor's  own  responsibility,  and,  if 
it  is  done  wrongfully,  the  vendee  can  reclaim  the  goods  and 
make  the  vendor  pay  for  ail  the  damages  he  sustains  resulting 
from  the  stoppage. 

309.  Goods  ill  Transit. — Another  of  the  necessary  condi- 
tions to  the  right  is,  that  the  property  about  which  it  is  to  be 
exercised  must  be  in  transit,  and  in  the  hands  of  a  common 
carrier.  If  the  goods  have  been  delivered  to  the  vendee,  or  are 
in  the  hands  of  his  agent,  there  can  be  no  stoppage.  The  fol- 
lowing kinds  of  delivery  have  been  held  to  be  sufficient  to 
destroy  the  right  of  stoppage,  viz.:  "A  delivery  of  the  key  to 
the  vendor's  warehouse  to  the  purchaser  ;  paying  the  vendor's 
rent  for  the  goods  left  in  his  warehouse  ;  delivering  to  the  vendee 
a  bill  of  parcels,  with  an  order  on  the  storekeeper  for  the  deliv- 
ery of  the  goods  ;  demanding  and  marking  the  goods  by  the 
agent  of  the  vendee,  at  the  inn  where  they  had  arrived,  at  the 
end  of  the  journey."  In  every  instance  where  the  goods  come 
into  the  hands  of  the  vendee  the  right  is  destroyed. 


STOPPAGE    IN   TRANSITir. 


151 


370.  Transit  Terminated.— The  transit,  so  far  as  this 
right  is  concerned,  is  terminated  as  soon  as  the  goods  come  into 
the  possession  of  the  vendee  or  his  agent.  But  it  need  not 
necessarily  be  an  actual  possession.  A  co7istructive  possession  is 
sometimes  deemed  sufficient,  as  being  placed  on  the  wharf  and 
notice  being  sent  thereof  to  the  vendee,  or  being  delivered  to  an 
agent  of  the  vendee,  who  is  to  re-ship  to  another  party.  The 
transit  is  always  ended  when  the  goods  have  reached  the  place 
of  delivery  and  the  vendee  has  exercised  some  act  of  ownership 
over  them.  But  if  the  goods  go  into  a  general  warehouse  at 
the  place  of  delivery,  and  the  vendee  has  not  done  any  such 
act,  the  vendor's  right  still  remains  good.  It  is  held  that  the 
vendee  may  meet  the  goods  while  in  transit,  and  take  possession 
of  them,  and  thus  terminate  the  right  of  stoppage. 

371.  Stoppage  by  Notice.— Although  this  right  is  one 
which  gives  the  vendor  the  privilege  of  overtaking  the  goods 
and  stopping  them,  yet  he  need  not  do  the  act  himself.  It  may 
be  done  by  his  agent,  and  it  may  aL.o  be  done  by  a  friend  who 
is  not  his  agent  at  the  time.  Ho  can  make  the  stoppage 
good  by  ratifying  the  friend's  act  before  the  transit  is  termi- 
nated, but  he  could  not  after  it  was  ended.  So,  also,  the  stop- 
page can  be  made,  by  giving  notice  to  the  common  carrier  in 
whose  possession  they  are  to  hold  the  goods,  and  then  claim 
them  of  him. 

37^.  Effect  of  stoppage.— The  sale  is  not  rescinded  by 
the  stoppage.  The  vendor  holds  the  goods  as  the  property  of 
the  vendee,  and  the  vendee  has  the  right  to  redeem  the  goods 
by  paying  the  price.  The  exercise  of  the  right  of  stoppage  by 
the  vendor  places  the  parties  back  where  they  were  at  the  time 
the  vendor  parted  with  the  goods,  and  restores  his  right  of  lien, 
and  he  may  then  sue  for  the  price  if  the  goods  are  ready  for 
delivery  on  payment  being  made. 


..  ! 


( ^ 


AGENCY. 


37*t.  An  Agency. — An  agency  is  the  result  of  a  contract, 
either  express  or  implied,  whereby  one  person  is  authorized  to 
act  in  the  place  of  another  in  some  matter  of  business.  The 
magnitude  of  business  carried  on  by  individuals  renders  it  im- 
perative to  substitute  others  to  do  much  of  the  work  which  is 
done  in  the  name  of  the  principal.  The  general  rule  is,  that 
anything  a  person  can  rightfully  and  legally  do  himself,  he  has 
a  right  to  appoint  an  agent  to  do  in  his  stead.  The  contract 
between  the  principal  and  agent,  whether  express  or  implied,  is 
in  the  nature  of  a  trust,  in  which  the  principal  confides  to  the 
agent  the  management  or  performance  of  some  business  trans- 
action to  be  done  on  account  of,  or  in  the  name  of  the  principal. 
The  act  of  the  agent,  when  legally  authorized,  is  the  same  as  if 
done  by  the  principal. 

371.  How  Created. — The  contract  which  creates  the 
agency  may  be  a  formal  writing  under  seal,  as  a  power  of  attor- 
ney, or  it  may  be  a  written  agreement,  or  a  letter  of  instructions, 
or  a  verbal  agreement  or  appointment,  or  it  may  be  implied 
from  facts  and  circumstances.  The  convevance  of  land  and 
other  contracts  required  to  be  under  seal,  can  only  be  made  by 
an  agent  whose  appointment  is  established  by  a  sealed  instru- 
ment. For  ordinary  contracts  a  written  or  verbal  agreement  or 
appointment  is  all  that  is  required. 

37o.  The  Principal. — Generally  the  principal  may  ap- 
point any  person  as  agent  who  is  capable  of  transacting  the 
agency  business  intelligently.  Persons  who  cannot  do  business 
for  themselves  on  account  of  legal  restrictions,  as  married 
women,  and  infants,  may  be  appointed  as  agents.  The  reason 
of  this  is,  that  the  act,  when  done,  is  in  law  that  of  the  princi- 
pal, and  is  not  affected  by  the  disability  of  the  agent.     But  a 

152 


^1 


AGENCY. 


15^ 


prmcipal  cannot  delegate  authority  to  an  agent  to  do  an  unlaw- 
ful act.  And  where  the  thing  to  be  done  is  of  the  character 
of  a  personal  trust,  which  is  confided  to  him  on  account  of  his 
ability  and  integrity,  as  an  executor  or  attorney,  he  cannot  dele- 
gate it  to  another. 

370.  The  Agent. — The  agent  may  receive  his  authority  by 
a  formal  appointment,  or  he  may  be  constituted  such  by  his 
acts.  If  a  principal  willingly  allows  a  person  to  do  acts  in  his 
name,  of  which  he  is  cognizant,  he  will  be  presumed  to  have 
given  him  authority.  As  where  he  allow  him  to  sell  his  prop- 
erty without  objection,  he  will  be  bound  by  the  sale.  But 
where  the  act  to  be  done  for  the  principal  must  be  done  under 
seal,  an  implied  authority  will  not  sufiice ;  the  appointment 
must  be  under  seal.  A  verbal  appointment  is  sufficient  author- 
ity for  signing  an  unsealed  paper.  Where  an  agent  is  ap- 
pointed by  a  corporation  the  general  rule  is  the  same. 

377,  Several  Principals. — Where  there  are  several  prin 
cipals  not  jointly  interested,  but  who  are  tenants  in  common, 
the  rule  is,  that  no  one  of  them  has   authority  to  appoint  an 
agent  for  all,  unless  by  the  consent  of  all ;  but,  in  case  of  a 
partnership,  one  partner  can  appoint  an  agent  for  all. 

378.  Several  Agents. — Where  several  persons  are  ap- 
pointed by  law  as  agents  the  thing  to  be  done  may  generally  be 
executed  by  a  majority  of  them.  And  where  goods  have  been 
consigned  to  two  factors  to  be  sold,  either  one  has  a  right  to  sell 
without  the  consent  of  the  other.  So,  also,  where  a  partnership 
is  appointed  as  agents  either  partner  has  a  right  to  act  in  the 
firm-name. 

370.  Extent  of  the  Agent's  Authority.— The  extent 

of  the  agent's  authority,  to  bind  the  principal,  is  to  be  gathered 
from  the  appointment,  and  depends  upon  the  power  which  has 
been  impliedly  or  expressly  vested  in  him.  If  he  exceed  the 
power  given  him,  the  principal  will  not,  in  general,  be  bound, 
unless  he  has  so  treated  him  as  to  imply  that  he  is  a  genera] 
agent.  If,  therefore,  the  agent  go  beyond  his  authority,  and  do 
an  act  outside  of  his  proper  agency,  the  principal  will  not  be 


?.    t.' 


154 


COMMEllCIAL    LAW    AND    BUSINESS    FORMS. 


I 

i 


I>ound.  Authority  may  sometimes  be  implied  from  previous 
acts  of  the  agent  which  have  been  sanctioned  by  the  prmcipal, 
and  which  were  of  a  similar  nature.  So,  if  an  act  be  done  with- 
out authority,  and  the  principal,  with  knowledge  of  the  fact, 
adopt  it,  by  taking  the  benefit  of  it,  he  will  be  bound,  and,  in 
some  instances,  an  adoi)tion  may  result  from  remaining  silent,  as 
where  an  agency  really  exists  from  some  general  relations,  and 
the  agent  notifies  the  principal  of  some  act  done  for  him,  it 
devolves  upon  the  principal  to  express  his  dissent,  or  he  will  be 
bound  by  the  agent's  acts. 

380.  Kinds  of  Agency. — There  are  several  kinds  of 
agency,  the  first  division  of  which  is  into  special  and  general ; 
second,  limited  and  unlimited ;  third, /ae^or  and  broker. 

HSl.  A  Special  Agency. — A  special  agency  IS  an  agency 
to  do  a  single  act.  But  to  limit  the  authority  to  a  particular 
l)usiness  does  not  make  it  a  special  agency;  because  it  may  be  as 
general  in  relation  to  that  particular  business  as  if  it  were  un 
limited  in  extent.  Every  person  dealing  with  a  special  agent  must 
ascertain  what  the  extent  of  his  authority  is,  and  at  his  own  risk 

38^.  General  Agency. — A  general  agency  consists  of 
delegated  authority  to  do  anything  about  a  particular  business. 
The  rule  here  is,  that  the  principal  is  bound  for  all  acts  of  the 
agent  that  come  within  the  scojje  of  the  business,  or  general 
authority  vested  in  him.  If  an  agent  is  appointed  to  sell  goods, 
and  instructed  not  to  warrant  them,  but  he  nevertheless  warrants 
them,  the  principal  will  not  be  bound  by  the  warranty.  But, 
if  a  person  is  authorized  to  sell  and  warrant,  and  warrants  in  a 
particular  case  in  apposition  to  private  instructions,  the  princi- 
pal will  be  bound  by  the  warranty. 

•1^3.  Limited  Agency. — This  division  of  agency  is  one  in 
which  the  agent  is  bound  by  particular  instructions,  and  applies 
to  a  general  agent,  restricting  and  limiting  his  authority. 

384.  Unlimited  Agency.— An  unlimited  agency  is  applica- 
ble to  a  special  agent,  giving  him  authority  to  use  any  means 
he  may  find  necessary  to  accomplish  the  thing  to  be  done. 


tu"  :i  ih. 


AGENCY. 


155 


385.    A  Factor.— The  commercial  division  of  ao-ency  is  that 
of  factor  and  broker.     The  factor  is  one  who  has  the  property 
of  his  principal  in  his  own  possession  for  sale.     He  is  commonly 
called  a  commission  merchant,  and  the  goods  received  from  the 
principal  for  s^le  are  called  a  consig^iment.     If  the  agent  accom- 
pany the  cargo  on  a  voyage,  he  is  called  a  supercargo.     A  factor 
has  the  goods  in  his  own  possession,  and  may  buy  and  sell  ^oods 
in  his  own  name  without  disclosing  the  name  of  his  principal 
The  factor  has  a  special  property  in  the  goods  or  subject-matter 
of  sale.     The  rule  is,  that  a  factor  is  always  entitled  to  his  com- 
missions  if  he  has  properly  i^erformed   his  duty.     But  it   is  a 
question  not   well  settled    whether    he    can  recover  his  commis- 
sions if  the  purchaser  fails.      This   will    depend    much  upon  the 
usage  and  custom  in  the  place  where  he  is  doing  business. 

380.  A  Broker.— A  broker  is  one  who  is  employed  to 
negotiate  sales  between  the  buyer  and  the  seller.  He  gets  his 
pay  for  doing  the  business  generally  by  chaiging  so  mudi  per 
cent,  on  the  value  of  the  property  negotiated,  and  it  is  called  a 
commission  or  brokerage.  He  acts  as  a  middle-man  between  the 
buyer  and  seller,  and  undertakes  to  bring  about  the  exchanges 
of  property,  and,  accordingly,  as  he  makes  a  specialty  of  one 
kind  of  business  or  another,  he  is  called  a  real  estate  broker,  an 
exchange  broker,  a  stock  broker,  etc.  He  does  not  have  posses- 
sion of  the  goods  or  property  which  he  negotiates,  nor  has  he 
any  authority  to  sell  in  his  own  name.  Sometimes,  however,  the 
same  person  is  both  factor  and  broker. 

387.  Rules  of  Construction.— Formal  written  instru- 
ments are  usually  sti'ictly  construed,  and  are  to  be  so  interpreted 
as  not  to  exceed  the  authority  given,  or  what  is  absolutely 
necessary  to  accomplish  the  object  of  the  agency.  Thus,  a 
power  to  sell  land  does  not  confer  authority  to  lease  it,  or  'to 
give  permission  to  cut  timber  on  the  land,  even  though  it  should 
be  done  with  a  view  of  inducing  a  party  to  buy.  But,  if  an 
agent  is  employed  to  get  a  bill  discounted,  which  is  payable  to 
the  order  of  his  principal,  he  may  indorse  the  principaf's  name 
on  the  back,  and  the  principal  will  be  bound  by  such  indorse- 
ment.    Authority  delegated  by  a  written  instrument  is  restricted 


4 


156 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


AGENCY. 


157 


i         >i 


to  such  acts  as  are  plainly  incident  to  the  main  object  to  be 
secured.  An  auctioneer,  as  such,  has  no  authority  to  bind  the 
owner  of  goods  which  he  sells  by  a  guaranty.  When  the  lan- 
guage by  which  the  authority  was  given  is  susceptible  of  differ- 
ent meaning  by  which  the  agent  was  misled,  and  adopted  a 
course  not  designed  by  the  principal,  yet  he  will  be  bound, 
because  he  occasioned  the  mistake. 

388.  What  Strangers  are  Governed  By. — Strangers  who 
deal  with  a  special  agent  are  under  obligations  to  ascertain  just 
what  authority  has  been  vested  in  the  agent,  and  what  is  the 
extent  of  his  agency.  The  mere  fact  of  his  being  a  special 
agent  shows  that  his  agency  is  limited,  and  is  sufficient  notice  to 
put  those  who  deal  with  him  on  their  guard.  But  in  a  general 
agency  it  is  different.  Here  third  persons  have  a  right  to  be 
governed  by  the  acts  of  the  parties,  and  not  by  any  private 
understanding,  or  arrangement,  between  the  principal  and  agent. 
Whatever  authority  is  conferred  upon  a  general  agent  by  the 
public  declarations  or  acts  of  the  principal  he  will  be  bound  by, 
so  far  as  strangers  are  governed  in  their  dealings  with  the  agent, 
bv  those  declarations  and  acts.  The  authority  which  is  dele- 
gated to  the  agent  by  the  principal  is  largely  influenced  and 
sometimes  superseded  by  that  which  he  allows  him  to  assume. 
But  the  principal  is  only  bound  by  such  representations  in  re- 
gard to  the  subject-matter  as  the  agent  makes  in  his  character 
as  agent.  Thus  his  statements  as  to  the  quality  of  goods,  when 
he  is  selling,  will  be  binding  upon  the  principal,  but  if  made  at 
any  other  time  when  not  engaged  in  the  agency  business,  they 
would  not  be  binding. 

389.  Specific  Instructions. — When  the  agent  receives 
specific  instructions  from  the  principal,  he  must  faithfully  com- 
ply if  they  are  not  unlawful,  except  when  some  unforseen 
circumstance  arises  which  would  change  the  intentions  of  the 
principal,  or  render  it  impossible.  The  rule  is,  that  every  loss 
which  is  the  result  of  non-compliance  with  the  principal's 
orders,  must  be  borne  by  the  agent ;  but,  if  there  be  any  profit, 
it  belongs  to  the  principal.  A  slight  and  unimportant  deviation 
from  the  instructions  will  not  make  the  agent  liable  if  the    prin- 


cipal object  is  attained.  For  instance,  if  an  agent  is  instructed 
to  buy  goods  at  a  limited  price,  and  he  should  pay  more,  but 
save  enough  on  freight  to  make  it  up,  he  would  be  excused, 
^ut  where  no  particular  instructions  are  given,  the  agent  must 
conform  to  the  usage  of  trade,  or  the  custom  of  the  place,  with 
reference  to  his  particular  agency.  And  where  a  consignee  is 
instructed  to  sell  goods,  he  has  a  right  to  sell  on  credit  if  that 
is  the  general  custom  of  the  place.  But  if  he  is  authorized  to 
sell,  he  has  no  right  to  barter  the  goods  off  nor  to  pledge  them. 

390.  Accounts  and  Touchers.— The  agent  is  bound  to 

keep  correct  accounts  and  vouchers  of  all  transactions  relating 
to  the  agency  business,  and  if  through  his  neglect  to  do  so 
there  should  be  any  loss  or  damage,  he  will  be  liable  to  the  prin- 
cipal. And,  if  his  accounts  are  not  kept  correctly  so  as  to  form 
a  proper  basis  upon  which  to  reckon,  he  will  not  be  entitled  to  any 
commission.  Whatever  profit  is  made  by  an  agent  in  the  course 
of  his  agency  business  belongs  to  the  principal,  whether  it  is  a 
direct  profit  or  only  incidental ;  and  no  agent  has  a  right  to  ap- 
propriate to  his  own  use  any  share  of  the  profit,  even  if  it  is 
incidental,  as  the  interest  on  the  principal's  capital,  notwith- 
standing it  should  seem  to  be  justified  by  usage.  The  law 
looks  upon  such  usage  as  a  usage  of  fraud. 

391.  Separate  Property.— The  agent  must  keep  the  prop- 
erty intrusted  to  him  by  the  principal  entirely  separate  from 
his  own.  If  he  carelessly  mix  his  own  property  with  that  of 
the  principal  the  law  will  consider  it  all  the  property  of  the 
principal.  So,  all  money  belonging  to  the  agency  should  be 
deposited  in  the  name  of  the  principal,  and  if  the  agent  deposit 

it  in  his  own  name,  without  anything  to  distinguish  it  from  his 
own,  and  the  bank  should  fail,  the  agent  would  be  liable  for 
the  loss. 

392.  Authority  to  Receive  Money.— A  person  can  safely 

pay  money  to  an  agent  when  the  principal  has  authorized  him 
to  do  so.  But  the  authority  of  an  agent  to  receive  money  due 
to  the  principal  on  a  written  instrument  ought  to  be  accom- 
panied by  the  instrument,  so  that  the  payment  may  be  indorsed 


J*  4k 


: 


158 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


f-i 


i 


or,  if  it  be  in  full,  the  instrument  be  given  up.  Where  goods 
have  been  purchased  of  a  factor  the  purchaser  has  a  right  to 
pay  hiiu,  unless  the  principal  notifies  the  buyer  not  to  pay  the 
agent.  The  general  rule  is,  that  a  broker,  by  reason  of  not 
having  the  goods  in  possession  which  he  sells,  is  not  authorized 
to  receive  money.  ]>ut  where  the  ])rincipal  is  not  known,  he 
may  bind  by  receiving  payment,  because  he  then  takes  the  j)lace 
of  the  principal.  So,  also,  custom  and  usage  will  sometimes 
justify  a  person  in  paying  a  broker.  And  where  an  agent  is 
authorized  to  receive  money,  a  tender  to  him  is  the  same  as  if 
made  to  the  principal. 

30^.  Del  (  redere  Coiiimissious. — When  it  is  the  custom 
to  sell  goods  on  credit,  the  factor  sometimes  guarantees  the 
sale,  provided  the  principal  agree  to  allow  him  a  larger  per- 
centage of  commission  than  is  usual.  lie  is  then  said  to  receive 
a  del  credere  commission.  In  case  the  ])urchaser  does  not  pay, 
the  agent  then  becomes  personally  liable. 

5101.  Tiolatioii  of  Duty. — If  losses  occur  in  consequence 
of  violation  of  duty  by  negligence  or  misconduct,  the  agent 
will  be  liable  to  his  principal;  as  where  an  agent  knowingly 
deposits  goods  in  an  improper  place,  and  they  are  destroyed  by 
lire,  he  would  be  liable  for  the  loss.  So,  if  an  agent  neglect  to 
procure  insurance  when  he  is  instructed  by  his  principal  to  in- 
sure, or  when  it  is  the  custom  of  the  place  to  insure,  he  will  be 
held  liable.  But  where  a  person  receives  an  order  to  buy 
twenty-five  shares  of  Kew-York  Central  Railroad  stock,  and  he 
goes  into  the  market  and  finds  only  ten  shares  for  sale,  which  he 
buys,  and  then  is  unable  to  buy  any  more,  the  principal  will  be 
bound  for  the  purchase  of  the  ten  shares,  because  it  was  the 
best  the  agent  could  do  under  the  circumstances. 

305.  Duties  of  Ageut. — Every  agent  is  presumed  to  pos- 
sess a  reasonable  amount  of  skill,  and  is  bound  to  exercise  ordi- 
nary diligence  about  the  trust  he  is  to  perform.  The  skill 
required  is  such  as  persons  of  an  average  capacity  bring  into 
requisition  in  their  own  matters  of  business.  Ordinary  diligence 
is  that  which  persons  of   common  prudence   use  in  their  own 


1    • 


ai*  i 


AGENCY. 


159 


affairs.     An  agent  is  not  only  bound  to  obey  the  specific  in- 
structions of   his  principal,  but   he   is  also  bound  to  obey  in- 
cidental orders  when  he  has  undertaken  to  perform  duties  out 
of  which  the  incidental  orders  naturally  come.     As  where  the 
agent  receives  a  consignment  of  goods,  with  instructions  to  sell, 
and  nothing  is  said  about  insurance.    If  it  is  the  custom  to  Insure 
it  is  his  duty  to  secure  insurance;    or  if  he  sells  goods  for  the 
principal,  and  takes  notes  in  payment,  he  must  present  the  notes 
for  payment  on  the  day  of  maturity,  and,  if  not  paid,  must  have 
them  properly  protested,  and  notices  sent,  or  he  will  be  person- 
ally liable.     The  consignor  of  goods  generally  has  the  power  to 
control   the    sales,    except   when   the   consignee    has    advanced 
money,  or  incurred  liability,  on  account  of  the  consignment,  in 
which  case  he  may  control  it  until  he  is  reimbursed.     But  the 
consignor  can  in  such  case  again  secure  control,  by  offering  to 
pay  the  charges. 

:i96.   Liability  of  Agent.— An  agent  is  sometimes  liable 
for  a  larger  sum  than   the  amount  of   money  advanced  by  his 
principal,  and  the  interest  thereon.     If  he  receive  an  order,  with 
money,  from  his  principal,  directing  him  to  purchase  a  particu- 
lar kind  of  goods,  and  he  wilfully  convert   the    money  to   his 
own  use,  and  the  goods  rapidly  increase  in  value,  he  is  liable 
for  the  increased  value,  as  well  as  the  principal  and  interest. 
He  is  also  liable  for  losses  sustained  by  reason  of  his  neglect  or 
want  of  due  diligence  in  the  execution  of   his  trust.     So,  also, 
he  is  liable  to  the  principal  for  any  damages  which  he  has  had 
to  pay  to  third  persons  for  injury  to  their  property,  caused  by 
the  act  of   the  agent  while  in  the  performance  of  the  agency 
business.     But  where  an  agent  is  expressly  directed  to  do  an 
act,  and  its  performance  would  not  result  in  any  legal  benefit  to 
the  principal,  there  will  be  no  liability  if  he  neglect  it.     There 
will  be  no  liability  when  there  arises  an  unforseen  necessity, 
which  was  not  expected  by  the  parties,  nor  where  a  strict  com- 
pliance has  become   impossible    by  reason  of  peculiar  circum- 
stances;   or  if   the  subject-matter  of   his  agency  be  founded  in 
illegality  or  fraud,  or  contravene  the  princii)les  of  i)ublic  policy. 
In  any  case  there  must  be  both  an  injury  and  a  wrong  in  order 
to  sustain  an  action. 


V 


II 


¥^ 


4  •,.'• 


I 


160 


V 


COMMERCIAL    LAW    AND    BUSINESS    Fl>RMS. 


;it>7.  All  Adverse  Party.— The  law  does  not  permit  an 
agent  to  defeat  a  trust  that  he  has  accepted,  by  becoming  an 
adverse  party  to  his  principal.  If  he  is  appointed  to  sell  goods, 
he  cannot  buy  the  same  goods,  either  for  himself  or  for  a  third 
person.  The  agent  cannot  do  his  full  duty  to  the  principal 
when  he  is  engaged  in  transactions  which  conflict  with  the 
interests  of  the  principal. 

398.  Agent,  a  "Bailee.— An  agent  who  has  property  belong- 
ing to  his  principal  in  his  possession,  occupies  the  position  of  a 
bailee  for  hire,  and  must  take  as  much  care  of  the  goods  as  a  person 
of  common  prudence  would  take  of  his  own  property.  If  he  is 
i^uilty  of  neglect  he  will  be  liable  to  the  principal.  Where  loss 
is  sustained  by  the  principal  in  consequence  of  neglect  to  notify 
him  of  material  facts  of  interest  to  him,  the  agent  will  be  re- 
sponsible. 

:I09.  AVlieil  Account  for  Price.— Generally  an  agent  is 
not  under  obligation  to  account  for  the  price  of  goods  he  has 
sold  until  he  has  received  the  money  from  the  purchaser.  But 
there  are  a  few  exceptions  to  this  rule;  first,  where  he  has  im- 
])roperly  sold  the  goods  on  credit,  or  where  he  has  given  a  longer 
credit  than  his  instructions  or  custom  warranted;  second, 
where  his  own  neglect  was  the  cause  of  the  payment  being 
delayed. 

400.  Personal  Liability.— An  agent  generally  avoids 
personal  liability  when  he  makes  the  contract  in  the  name  of 
the  principal  and  under  his  authority;  but  there  are  some  ex- 
ceptions: first,  he  makes  himself  liable  if  the  principal  is  not 
known;  second,  if  there  is  no  responsible  principal,  except 
public  agents  who  are  known  to  contract  for  the  government, 
and  are  not,  therefore,  liable;  third,  when  the  contract  is  made 
expressly  his  own;  and,  fourth,  where  he  exceeds  his  authority. 
An  agent  is  always  liable  when  he  binds  himself  by  a  formal 
engagement.  And  so,  also,  if  the  principal  is  not  bound  by 
reason  of  the  agent's  exceeding  his  authority,  he  himself  will 
be  bound.  An  agent  is  liable  to  his  principal  only,  for  neglect 
or  noTi-performance  of  duty,  and  not  to  third  persons.     He  is. 


ii 


ill 


»  1  Hi*r 


AGENCY. 


161 


however,  liable  to  third  persons  for  wrongful  acts,  and  it  makes 
no  difference  whether  the  principal  authorizes  him  to  do  the  act 
or  not,  because  he  is  not  obliged  to  do  an  unlawful  or  wrongful 
act.  If  an  agent  refuses  to  deliver  goods  to  a  rightful  owner, 
ie  will  not  be  liable  for  conversion  of  the  property,  provided  he 
truly  places  the  refusal  upon  the  ground  that  he  has  no  author- 
ity to  do  so  from  his  principal. 

401.  Rights  of  the  Agent.— An  agent  is  an  employee,  or 
bailee,  who  works  for  hire,  and  he  is  entitled  to  his  wages 
when  his  trust  is  faithfully  performed.  His  principal  right, 
therefore,  is  to  receive  his  wages  by  way  of  commission,  tlie 
amount  of  which  may  be  determined  by  agreement  between  the 
parties,  or  by  custom  of  the  place,  or  by  a  jury.  To  secure  the 
payment  of  the  commission,  the  agent  is  given  the  right  of  lien 
on  the  property  in  his  possession,  and  also  the  right  to  insure 
the  property  for  his  own  benefit. 

An  agent  is  also  entitled  to  be  re-imbursed  for  costs  and 
damages,  which,  without  fault  of  his,  he  has  been  obliged  to 
pay  in  relation  to  the  agency. 

403.  Kights  of  Principals.— The  principal  being  bound 
by  the  contracts  and  acts  of  the  agent,  when  done  within  the 
scope  of  the  agency,  has  reciprocal  rights  against  third  persons, 
corresponding  with  his  own  liabilities.  The  principal  may! 
therefore,  sue  third  persons,  when  they  are  responsible,  on  their 
contracts  made  within  the  agency  business. 

403.  Liability  of  Principal.— The  principal  is  liable  to 
third  persons  for  the  negligence  or  unskilfulness  of  the  agent 
when  he  is  acting  in  fulfillment  of  the  agency  business,  even  if 
he  is  not  under. his  immediate  direction.  But  to  hold  the  prin- 
cipal responsible  for  the  act  of  the  agent,  it  must  be  shown  that 
It  was  done  during  the  performance  of  the  agency  business, 
and  not  while  he  was  about  his  own  business.  So,  also,  if  the 
agent  wilfully  occasion  damage  to  the  property  of  1  third 
person,  the  principal  is  not  liable. 

404.  Wrong  Expressly  Commanded  .-If  the  principal 

expressly  commands  a  wrong  to  be  done,  or  gives  orders  which 


•i  I  , 


! 


11 


162 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


cannot  be  carried  out  without  perpetrating  a  wrong  upon  third 
persons,  he  will  be  held  liable.  The  general  principle  is,  that 
for  all  torts,  frauds,  misfeasances  and  defaults  of  the  agent, 
done  in  the  regular  course  of  the  agency  business,  the  principal 
is  liable,  whether  he  participated  in  it  or  not,  provided  it  were  not 
a  wilful  act  of  the  agent.  The  agent  is  liable  equally  with  the 
princ'i})al  for  all  wrongs  do^e  by  him  by  command  of  his  principal. 

I0»>.  Sul)-A£:oiits. — The  agent  has  no  power  to  appoint 
sub-agents,  or  to  delegate  his  own  powers,  unless  expressly  au- 
thorized by  the  principal,  or  unless  the  nature  and  usages  of  the 
business  require  or  justify  it.  Sometimes,  where  a  business  is 
vast  or  greatly  extended,  an  agent  is  appointed,  with  power  to 
create  sub-agents  in  various  places,  and  for  various  purposes,  and 
with  various  powers. 

400.  Representations  of  Agents. — The  principal  is  liable 
for  representations  made  by  his  agent,  provided  they  are  con- 
nected with  and  accompany  the  act,  and  are  used  as  explaining 
or  qualifying  it,  and  provided,  also,  the  act  itself  comes  within 
the  agency  business. 

407.  Xotice  to  Airont. — A  notice  to  an  agent  is  generally 
considered  notice  to  the  principal,  but  to  have  that  effect  it  must 
liave  relation  to  the  agency  business,  and  come  within  its  scope. 
It  must  also  be  at  the  time  he  is  acting  as  agent  in  relation  to 
the  very  thing  about  which  the  notice  is  given.  When  notice 
is  given  to  the  cashier  of  a  bank  in  his  official  capacity,  it  is 
considered  notice  to  the  bank.  And  if  knowledge  is  acquired 
by  an  agent  in  the  course  of  his  business,  it  operates  the  same 
as  if  it  were  the  knowledge  of  his  principal. 

The  rule  as  to  the  sufficiency  of  notice  is  :  "  That  whatever  is 
notice  enough  to  excite  attention  and  put  the  party  upon  his 
guard,  and  call  for  inquiry,  is  notice  of  everything  to  which 
such  inquiry  might  have  led.  That  when  a  person  has  sufficient 
information  to  lead  him  to  a  fact,  he  shall  be  deemed  conversant 
of  it." 

108.  Purchases  >rado  by  Agent. — The  principal's  lia- 
bility may  be  affected  in  several  ways  by  purchases  made  by  his 


K- 


AGENCY. 


163 


agent:  First  when  the  goods  are  bought  expressly  in  the  princi- 
pal  8  name,  he  only  is  liable ;  second,  the  person  selling  the 
goods,  and  knowing  the  principal,  may  prefer  to  trust  the  accent 
and  having  elected  to  do  so,  he  cannot  afterwards  charge"  the 
prmcpa  ;  third,  where  an  agent  buys  without  disclosing  his 
principal,  the  seller  may  resort  to  either.  If  an  agent  represent 
himself  as  prmcipal  when  buying  goods,  the  vendor,  not  know- 
ing that  he  IS  acting  as  agent,  will  have  the  same  rights  against 
him  as  if  he  were  principal.  6  fe      ^t 

409.  Delivery  to  an  Agent—When  the  vendor  delivers 
goods  to  the  general  agent  of  the  principal  for  whom  they  were 
purchased,  the  title  of  the  property  passes  from  the  vendor  to 
the  pnncipal,  and  cut.  off  the  right  of  stoppage  in  transitu. 
iiut  If  the  goods  are  delivered  to   a  common  carrier  to  be  con- 

dest'royed       ''""''''   '''  "^'^  ''  '''^^^^'  ''  "^*  ^^ "^ 

410.  Money  Paid  by  Agent.-The  money  paid  by  the  a^ent 
can  be  ^  back  by  the  principal  if  it  has  bee'n  paK 
mistake,  or  if  the  consideration  has  failed,  or  if  the  money  w^s 

aSd'tr'^'^V^r  '^"  "  '^^"^'  ^^  ''  ''  --  fraudufently 
applied  to  some  illegal  purpose  for  which  the  agent  had  no  right 
to  use  it.  ii^iiu 

411.  Dissolution  of  Agency.-Tl.ere  are  three  ways  in 
which  an  agency  may  be  dissolved:  First,  by  a  relocation  of 
the  power  of  the  agent  by  the  principal  ;  second,  by  a  renuneia- 
tton  of  power  by  the  agent ;  third,  by  operation  of  law. 

413.  Revocation.-If  the  principal's  authority  has  not 
been  executed  .n  any  part,  he  may  revoke  it  at  any  time,  pro- 
vided  U  W.11  work  no  injury  to  the  agent.  But  if  the  authority 
be  guen  for  a  valuable  consideration,  or  if  an  interest  be  cou- 
pled w.th  u,  or  .f  it  form  part  of  a  security,  it  cannot  be 
revoked  unless  there  is  an  express  agreement  that  it  shall  be 
^vocable  But  .f  the  agency  has  already  begun  and  cannol 
be  separated  mto  parts  without  injury  to  the  agent,  the  princi- 
pal cannot  revoke  his  authority  without  making  himself  liable 
to  mdemnify  the  agent  for  all  loss  he  will  sustain. 


m 


' 


164 


OOMMERCIAL    LAW    AND    BUSINESS    FORMS. 


^1S«  How  Done. — The  principal  may  revoke  his  authority 
by  a  public  and  formal  declaration,  or  by  a  written  or  verbal, 
announcement  to  the  agent,  or  it  may  be  implied  from  the  acts 
of  the  principal,  as  where  he  puts  hindrances  in  the  way  of  the 
agent  to  prevent  his  performance,  or  where  he  appoints  another 
to  do  the  very  acts  which  were  to  be  done.  So  far  as  the  agent 
is  concerned,  the  revocation  takes  effect  from  the  time  he  re- 
ceives notice  thereof. 

11  1.  Renunciation.— The  agent  can  renounce  the  author- 
ity of  the  principal  at  any  time,  but  not  without  making  himself 
liable  to  the  principal  for  all  the  damages  and  losses  he  sustains 
in  consequence  of  the  renunciation,  except  where  it  is  a  gratui- 
tous and  purely  voluntary  agency. 

415,  Operation  of  Law.— An  agency  may  be  terminated 
by  operation  of  law  :  First,  by  lapse  of  time,  as  where  it 
was  created  for  a  year  and  the  year  expires  ;  second,  by  change 
in  the  condition  of  either  party,  producing  incapacity  to  act, 
such  as  insanity,  or  bankruptcy,  or  the  death  of  either  party,  or 
by  an  extinction  of  the  business  concerning  which  the  agency 
was  established.  Where  the  authority  is  terminated  by  the 
death  of  the  principal,  all  the  acts  of  the  agent  are  generally 
void  which  are  done  after  the  death,  even  if  they  are  done  in 
good  faith  and  in  ignorance  of  the  event.  To  this  rule  there  is 
an  exception  where  the  authority  is  couple*!  with  an  interest, 
in  which  Case  it  may  be  continued  in  the  name  of  the  agent. 

116.  Written  Contract  by  Agent.— When  a  written  con- 
tract is  made  by  an  agent  for  his  principal,  who  is  known,  it 
should  be  stated  in  the  body  of  the  contract  sufficiently  clear  to 
signify  that  it  is  his,  and  should  be  signed  with  the  name 
of  the  principal,  and  not  with  the  agent's  name  alone.  If 
an  ao-ent  is  directed  to  get  a  note  discounted  at  the  bank  which 
is  payable  to  his  principal  or  order,  he  has  implied  authority  to 
indorse  it  in  the  principal's  name,  and  should  sign  his  own  name 
under  as  agent.  A  person  may  bind  himself  by  any  mark  that 
he  may  see  fit  to  adopt  as  a  substitute  for  his  name,  if  he  does 
it  with  the  intention  of  being  bound. 


AGENCY. 


165 


Form  No.  69. 
417.   Power  of  Attorney, 

^txaxir  atl  ptctt  bij  tlicsc  grcscnts^  TViat  (i, 

John  Jones,  of  the  City  of  New-  York  and  State  of  New  -  York) 
have     made,    constituted    and    appointed,    and    by    THESE 
PRESENTS  do  make,  constitute  and  ajypoint  ( William  U. 
Prentice,  of  the  same  place,  my)  true  and  lawful  attorney  for 
(me)  and  in  {my)  name,  place  and  stead  to  (ask,  demand,  sue 
for,  collect  and  give  acquittance  for  all  sum^s  of  money,  debts  and 
demands  whatsoever,  lohich  are  or  shall  be  due,  owing  or  belong- 
ing to  me,  to  exercise  the  general  control  and  supervision  over  all 
my  lands,  tenements  and  hereditaments  ifi  the  City  of  Chicago 
or  State  of  Illinois  or  elsewhere.    With  power  to  rent,  lease;  collect 
rents,  keep  uj)  insurance,  pay  moneys  and  collect  mo7ieysfor  me. 
To  grant,  bargain  and  sell  any  real  estate  owned  by  me  for 
such  price  and  on  such  terms  as  to  him  shall  seem  meet,  and  for 
me  and  in  my  name  to  make,  execute  and  acknowledge  good  and 
sufficient  deeds  and  conveyances  for  the  same,) 
giviiig  and  granting  unto  {my)  said  attorney  full  jyower  and 
authority  to  do  and  perform  all  and  every  act  and  thing  whatso- 
ever requisite  and  necessary  to  be  done  in  and  about  the  premises, 
as  fully  to  all  intents  and  purposes  as  {l)might  or  could  do  if 
jyrsonally  present,  with  full  power  of  substitution  and  revocatio?i, 
hereby  ratifying  and  eonfrni  ing  all  that  (tny)  said  attorney  or  (his) 
substitute  shall  lawfully  do  or  cause  to  be  done  by  virtue  thereof 

%Xi  Wi\\\XtSS  UaTieVJCOf,  (/)  have  hereunto  set  my 
hand  and  seal,  the  {twenty -fftli)  day  of  {September)  one  thousand 
eight  hundred  and  {eighty-three). 

Sealed  and  Delivered  in  the  Presence  of 

■^ttitrd    ^tatfisi    of    g^mcrira,    ) 
STATE  OF  NEW-YORK,     \  ss. 

CITY  OF  NEW- YORK.  ) 

BE  IT  KNO  WN,  That  on  the  {twenty-fifth)  day  of  {Sej^em- 
ber  one  thousand  eight  hundred  aiid  eighty-three)  before  me 
personally  appeared  {John  Jones)  above  named,  who  {is)  to  me 
perso7iaUy  knoicn  to  be  the  2)erso7i  described  in  and  who  executed 
the  above  Letter  of  Attorney,  and  acknowledged  the  same  to  be 
{his)  free  act  and  deed 

IN  TESTIMONY  WHEREOF,  I  have  hereunto  subscribed  my 
name,  the  day  and  year  last  above  written. 


'-a^^  cj^-a^€d. 


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IC'J 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


Form  No.  70. 


4tl8.  Agreement  to  Sell  Manufactory,  Stock  and 

Good-Will. 

^lliS  ;Agt*CCIttCnt^  made  the  5th  day  of  September,  1882, 
between  Iloswell  Goodman,  of  Chicaf/o,  III.,  and  Duncan  J3eU 
of  the  same  city,  witnesseth :  That  the  said  Iloswell  Goodm.an, 
for  the  consideration  hereinafter  specified,  agrees  to  sell  to  the 
said  Duncan  Dell,  and  the  said  Duncan  Dell  agrees  to  buy  of 
the  said  Roswell  Goodman,  all  the  machinery  and  appurtenances 
whatsoever  belonging  thereto,  and  all  the  stock  of  furniture  and 
lumber  on  hand  \ch ether  manufactured  or  in  course  of  construc- 
tion, ar^d  cdl  material  of  whatsoever  kind  and  nature  used  or  to 
be  used  in  or  about  said  m.anufactory,  now  occupied  by  the  said 
Doswell  Goodman,  on  the  corner  of  Indiana  and  Randolph 
/Streets,  and  also  the  good-will  of  the  business  heretofore  carried 
on  there,  by  the  said  Roswell  Goodman. 

IN  CONSIDERATION  THEREOF,   the  said  Duncan 

Dell  agrees  to  pay  to  the  said  Rosicell  Goodman  twenty  five, 
thousand  dollars  on  the  first  day  of  October,  1SS2,  and  give  his 
note  for  twenty  five  thousand  dollars,  payable  one  year  after  date, 
the  haid  note  to  be  indorsed  by  Geo.  C.  Wells,  and  to  be  further 
secured  by  a  chattel  mortgage  on  all  tlie  machinery  co}itained  in 
and  used  about  said  manufactory.  And  the  said  Roswell  Good- 
man furtJier  covenants  and  agrees  to  and  icith  tJie  said  Duncan 
Dell  that  he  tcill  not  at  any  time  hereafter  engage  directly  or 
indirectly  or  concern  himself  in  carrying  on  or  conducting  the 
business  of  manufacturing  furniture,  either  as  principal,  agent 
or  servant,  within  07ie  hundred  miles  of  the  City  of  Chicago. 
And  it  is  expressly  understood  and  agreed  to,  that  the  stipula- 
tions aforesaid  are  to  apply  to,  and  to  bind  the  luirs,  executors 
ajid  administrators  of  the  respective  parties,'  and  iti  case  of 
failure  the  parties  bind  themselves  each  unto  the  other  in  the  swn 
of  ten  thousand  dollars  as  liquidated  damages  to  be  paid  by  the 
Jailing  party. 

IN  WITNESS  WHEREOF,  we  have  this  tenth  day  of  August, 
16S2.  affixed  our  hands  and  seals. 


-adu^^ 


u^i-c^i^n 


^t-tz-n 


/ 


Dy  ^^Aiz-p^  G4^c^<X'n,  Attorney. 


. 


PARTNERS]  TIP. 


-♦♦■^ 


419.  A  Partnership. — A  partnership  is  generally  defined 
to  be  the  result  of  a  voluntary  contract  between  two  or  •tnore 
competent  persons  to  unite  their  money,  effects,  labor,  or  skill, 
or  some,  or  all  of  them,  in  some  lawful  business,  with  the  under- 
standing tliat  there  shall  be  a  community  of  profits.  It  is  not 
essential  that  all  the  partners  furnish  capital;  one  may  furnish 
all  the  capital,  and  others  the  labor,  or  skill,  or  vice  versa. 

The  important  powers  conferred  upon  the  individual  partners 
by  the  execution  of  the  partnership  contract,  makes  it  necessary 
to  inquire  into  the  essential  elements  which  constitute  sucH  a 
contract. 

420,  Community  of  Profit.— This  is  considered  an  essen- 
tial element  of  tlie  contract  of  partnership.  The  idea  of  profit 
must  enter  into  the  contract  or  there  can  be  no  partnership. 
Where  parties  contribute  each  a  certain  sum  to  make  a  joint 
I)urchase,  and  the  goods  are  afterw^ards  to  be  divided  between 
them  in  the  same  proportion,  it  does  not  constitute  a  partner- 
ship. In  order  to  make  it  a  partnership  there  must  be  a  sale  of 
the  goods,  and  a  distribution  of  the  proceeds.  If,  in  a  pretended 
contract  of  partnership,  it  should  be  agreed  that  one  of  the 
parties  should  have  all  the  profit,  it  is  not  a  partnership.  It  is 
not  essential  that  the  partners  should  share  the  profits  equally; 
they  may  share  in  any  proportion  they  may  agree  upon.  So, 
also,  they  may  agree  to  share  the  profits,  and  if  there  be  no 
profit,  but  a  loss,  that  the  loss  shall  be  divided  between  two  or 
more,  or  shall  be  borne  entirely  by  one.  But  community  of 
profit  generally  implies  also  community  of  losses,  in  a  limited 
sense. 

167 


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168 


COMMERCIAL    LAW    AND    BUSINESS    FOKMS. 


421.  Partners  as  to  Third  Persons.— There  are  in- 
stances where  the  parties  are  held  to  be  partners,  as  to  third 
persons,  when  they  are  not  really  partners  as  between  them- 
selves. This  may  occur,  1st,  where  there  is  no  community  of 
capital,  but  the  parties  agree  to  share  in  the  profit  or  loss  of  the 
adventure,  or  business,  as  principals,  in  some  proportion  agreed 
upon;  2d,  where  there  is  no  capital  invested,  but  they  agree 
to  contribute  their  industry,  labor  and  skill,  and  share  the  profits 
and  losses,  in  some  fixed  proportion,  as  princ*i})als;  3«1,  where 
a  person  is  not  a  partner  at  all,  but  holds  himself  out  as  a 
partner,  to  a  third  person,  who  gives  him  credit,  as,  for  instance, 
an  agent  who  is  authorized  to  buy  goods  for  a  firm,  on  credit, 
and  represents  himself  as  being  a  partner  in  the  firm.  In  each 
of  these  instances  the  parties  will  bo  liable  to  the  third  parties 
as  partners. 

4*22.  Profits  as  Principal.— It  is  not  only  necessary  for 
the  parties  to  share  the  profits  simply,  to  constitute  them 
partners,  but  they  must  share  them  as  principals,  and  not  as 
agents.  It  is  sufficient  if  they  share  in  the  profits  as  profits, 
that  is,  after  the  losses  have  been  deducted  from  the  gross 
profits.  But  the  amount  of  profit  or  of  loss  that  each  shall 
share  may  vary  in  any  degree  which  the  partners  may  agree 
upon.  The  reason  of  this  is  that  the  experience,  labor  and 
skill  of  the  partners  may  vary  to  any  extent,  and  therefore 
justly  entitle  one  to  a  much  larger  share  than  another.  If  one 
receive  out  of  the  profits  a  certain  share,  merely  as  a  compen- 
sation for  his  services,  he  is  not  a  partner. 

423.  Mutual  Assent.— As  a  ]»artnersliip  is  the  result  of  a 
voluntarv  contract  between  the  parties,  it  follows  that  there  can 
be  no  partnership  without  the  mutual  assent  of  all  the  partners. 
It  is  governed  by  principles  of  natural  law  and  justice,  and 
should  be  established  in  good  faith,  by  the  mutual  consent  of  all 
the  parties. 

424.  How  Formed. — The  common  law  does  not  require 
any  particular  forms  to  constitute  a  partnership.  It  is  a  simple 
contract,  formed  by  the  voluntary  consent  of   the  j)arties,  and 


PARTNERSHIP. 


169 


may  be  either  express  or  implied.  It  may  be  by  written  articles 
of  agreement,  signed  by  the  parties,  or  by  a  verbal  agreement, 
or  by  the  acts  of  the  parties. 

425.  Written  Articles. — The  responsibilities  assumed  by 
the  formation  of  a  partnership,  and  the  liabilities  incurred  by 
the  acts  of  co-partners,  should  prompt  every  business  man  to 
put  this  contract  in  writing.  When  written  articles  are  made, 
every  possible  provision  and  stipulation  which  will  be  likely  to 
prevent  misunderstanding,  or  disagreement,  should  be  inserted. 
When  the  contract  is  in  writing,  the  presumption  of  the  law  is 
that  all  the  provisions  and  stipulations  are  included  in  the  writ- 
ing, and,  therefore,  any  verbal  agreement  in  connection  there- 
with, between  the  parties,  will  be  excluded.  But,  whether  the 
contract  be  in  writing,  or  verbal,  the  acts  of  the  partners, 
although  contrary  to  the  written  provisions,  if  sanctioned  by 
the  co-partners,  will  govern  instead  of  the  writing.  The  acts  of 
parties  are  of  such  importance  that  a  person  may  make  himself 
liable  as  a  partner  by  representing  to  a  third  person  that  he  is, 
and  inducing  him  to  act  upon  such  representation. 

426.  Terbal  Agreement. — As  every  contract  is  founded 
upon  the  mutual  agreement  of  the  parties,  it  may  either  be 
formally  made  in  words,  or  may  be  committed  to  writing. 
When  it  is  formal,  and  either  stated  verbally  or  in  writing,  it  is 
said  to  be  an  express  contract.  The  only  important  difference 
between  a  written  or  parol  contract  is  in  regard  to  the  mode  of 
proving  it.  A  partnership  formed  by  verbal  agreement  is  as 
binding  as  if  it  were  in  writing. 

427.  Implied  Agreement. — The  acts  of  the  parties  may 
be  such  that  the  law  will  raise  an  implied  contract,  and  establish 
a  partnership.  If  the  parties,  without  any  express  agreement, 
buy  and  sell  goods,  and  divide  the  profits,  or,  if  each  contribute 
labor,  and  services,  and  materials  in  the  manufacture  of  any 
articles  of  trade,  and  the  articles  are  distributed  between  them, 
they  will  be  considered  partners. 

428.  Objects  of  Partnership.— The  primary  object  to  be 
secured  in  the  formation  of  partnerships,  is  to  combine  capital, 


a  i 


■I 


i    'i 


170 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


or  labor,  or  skill,  or  two  or  more  of  tliem,  in  order  to  carry  on 
larger  enterprises  and  produce  better  results  than  could  be 
secured  separately.  It  may  be  for  mechanical,  commercial,  or 
professional  business,  or  for  atiy  other  which  is  lawful.  It  may 
be  limited  to  a  single  adventure,  or  it  may  embrace  the  most 
extensive  operations. 

4*29.  Joint  Stock  Companies. — A  joint  stock  company  is 

a  corporation  organized  under  a  general  or  special  act  of  the 
Legislature  for  the  ])urpose  of  promoting  personal  or  public  in- 
terests. The  objects  to  be  secured  by  these  companies  are 
similar  to  those  of  a  simple  ])artnershij),  and  both  come  under 
the  same  general  principles.  They  are  based  upon  the  idea  of 
combining  the  means  of  a  larger  number  of  persons  than  are 
usually  found  in  ordinary  partnerships  with  a  view  to  securing 
more  capital  to  carry  on  the  projected  enterprise. 

4:iO.  Statnte  of  »w-York.— The  statute  of  the  State  of 
New- York  provides  that,  ''  Wiieuever  five  or  more  persons,  a 
majority  of  whom  shall  be  citizens  and  residents  of  this  State, 
shall  propose  to  form  a  corporation  under  the  provisions  of  this 
act,  they  shall  make  a  certificate  to  that  effect,  which  certificate 
shall  be  signed  by  each  of  such  persons  and  duly  acknowledged 
by  them  before  some  officer  authorized  to  take  acknowledo-- 
ments  under  the  laws  of  this  State.  Such  certificate  shall  set 
forth : 

"  First. — The  name  of  the  proposed  corporation. 

"  Second. — The  object  for  which  it  is  to  be  formed,  includinir 
the  nature  and  locality  of  its  business. 

"  Third. — The  amount  and  description  of  the  capital  stock. 

'•''Fourth. — The  number  of  shares  of  which  the  capital  stock 
shall  consist. 

"  Fifth. — The  location  of  the  principal  business  office. 

"  Sixth. — The  duration  of  the  corporation,  which,  however, 
shall  not  exceed  fifty  years." 

431.  License  by  Secretary  of  State.— "  Such  certificate 

shall  be  riled  in  the  office  of  the  Secretary  of  State;  and    the 


PARTXEKSHIP. 


171 


Secretary  of  State  shall  thereupon  issue  a  license  to  the  persons 
making  such  certificate,  empowering  them  as  commissioners  to 
open  books  for  subscription  to  the  capital  stock  of  such  corpor- 
ation at  such  times  and  places  as  they  may  determine;  but  no 
license  shall  be  issued  in  the  case  of  a  proposed  corporation 
having   the    same    name    as   an    existing    corporation    in    this 
State,  or  a  name  so  nearly  resembling  that  of  an  existing  cor- 
poration as  to  be  calculated  to  deceive."     Nearly  all  banking, 
insurance,  mining,  railroading,  and  express  business  is  carried  on' 
by  corporations,  very  generally  called  joint  stock  companies. 
The  management  of  such  companies  is  generally  vested  in   a 
board  of  directors,  who  elect  from  their  number  a  president  and 
other  necessary  officers.     The  liability  of  each  member  begins 
with  the  commencement  of  the  company. 

43a.   Limited  Partnerships.— Legislation  in  most  of  the 
States    has    authorized    the    formation   of   limited  partnerships. 
This  name  signifies  that  one  or  more  of  the  partners  of  a  firm  is 
limited  in  his  liability  to  third  persons  on  account  of  the  part- 
nership debts  to  the  amount  which  he  contributes  to  the  capital 
invested.     Only   a   part   of   the   partners   in   any  firm  can  be 
limited  in  this  sense,  as  there  must  be  some  who  are  general 
partners,  and  whose  individual  property  is  liable  for  the  debts 
of  the   firm.     The   statute,    in  consideration   of  granting  these 
privileges,  requires  that  certain  provisions  shall  be  strictly  and 
literally  complied  with.     The  name  of  the  limited  partner^is  not 
to  appear  m  the  firm,   nor  is  he  to  transact  any  business  on 
account  of  the  firm.    A  written  certificate  signed  by  the  parties, 
stating  the  terms  of  the  partnership,  must  be  recorded,  and  it 
must  also  be  published  in  the  newspapers. 

433.  Kinds  of  Partners.— Partners  are  usually  said  to  be 
of  three  kinds:  1st,  ostensible  partners;  these  are  the  real  part- 
ners, whose  names  appear  before  the  public,  and  who  manage  the 
business,  and  who  are  in  reality  what  they  appear  to  be ;  2d 
nom 2;^ .//partners;  persons  whose  names  are  used  in  connection 
with  the  business,  and  are  held  out  to  the  public  as  partners,  but 
who  are  not,  and  have  no  real  interest  in  the  business.  They 
lend  their  names  to  the  actual  partners,  and  become  liable  with 


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172 


COMMKRCIAL    LAW    AND    BUSINESS    FORMS. 


them  to  the  public;  3d,  dormant  partners;  persons  whose  names 
do  not  appear  to  the  public,  and  who  do  not  desire  to  be  known 
as  partners,  but  who  have  a  real  interest  in  the  business,  and  in- 
tend to  share  in  the  profits  without  being  liable  for  the  debts. 
There  are  also  /i'm/^ef/ partners,  who  avoid  liability  to  the  credi- 
tors beyond  the  limit  of  the  amount  of  capital  they  pay  into  the 
firm,  by  complying  with  the  provisions  of  the  statute  of  the 
State  where  such  a  partnership  is  formed. 

434.  Who  may  be  Partners. — The  common  law  rule  is 
that  any  person  of  sound  mind,  if  not  otherwise  restricted,  may 
be  a  partner.  Infants — or  persons  under  legal  age — are  not  re- 
strained by  common  law  from  entering  into  partnership,  since  it 
may  be  beneficial  to  their  interest  to  do  so.  Infants,  however, 
cannot  be  held  to  the  partnership  contracts  if  they  choose  to 
avoid  them.  When  a  person  under  age  becomes  a  partner,  he 
must  give  notice  within  a  reasonable  time  after  he  becomes  of 
age  that  he  disaffirms  the  contract,  or  by  his  acts  if  he  continues 
he  will  be  deemed  to  have  affirmed  the  contract. 

^  43«>.  Aliens. — Aliens  are  not  disabled  from  doing  business, 
and  may  enter  into  partnership  if  they  are  alien  friends.  But 
in  time  of  war,  alien  enemies  are  disqualified  for  entering  into 
partnership  with  each  other. 

436.  Married  Women. — Married  women  are  bv  common 
law  disqualified  from  forming  a  partnership,  yet  by  statute  in 
some  of  the  States  the  common  law  has  been  chanired,  and 
women  may  make  contracts  which  relate  to  the  business  they 
may  be  carrying  on,  or  such  as  relate  to  their  own  property. 

437.  Duration  of  Partnerships. — Partnerships  may  be 

formed  for  a  single  adventure,  for  a  term  of  years,  for  life,  or 
for  an  indefinite  period  of  time.  If  no  specified  time  is  fixed 
for  its  continuance,  it  is  subject  to  the  mutual  pleasure  of  the 
partners,  and  may  be  dissolved  at  any  time  by  the  withdrawal 
of  one  of  the  partners.  When  a  specified  time  is  fixed,  it  is 
presumed  to  run  until  the  time  expires.  But  the  law  does  not 
presume  that  the  partnership  will  continue  after  the  death  of 


PARTNERSHIP. 


173 


eithvi  of  the  partners.  And  if  it  is  so  intended  by  the  partners, 
it  must  be  provided  for  in  the  articles  of  agreement. 

438.  Relations  of  Partnership.— A  partnership  when 

created  is  like  an  artificial  person,  it  is  a  legal  entity  possessing 
rights,  and  subject  to  liability  the  same  as  an  individual.  It  is, 
as  it  were,  another  person,  brought  into  commercial  and  legal 
relations  with  the  individual  partners,  and  with  the  public  gen- 
erally. The  partnership  agreement  generally  specifies  what  the 
partnership  stock  shall  consist  of.  It  may  be  only  profits,  as 
where  A.  owns  goods,  and  B.  &  C.  unite  their  efforts  with  his 
in  selling  the  goods,  and  share  in  the  profits,  without  having  any 
interest  in  the  goods. 

The  agreement  should  always  specify  the  amount  of  interest 
each  partner  has  in  the  capital  stock,  and  also  the  proportionate 
share  they  each  shall  have  of  the  profits.  If  the  division  of 
profits  is  not  fixed  by  agreement,  the  law  presumes  that  each 
partner  is  entitled  to  an  equal  proportion. 

439.  Relations  of  Partners,— Each  individual  partner  has 
relations  with  his  co-partners,  and  with  the  partnership,  and  also 
with  third  persons.  In  ordinary  partnerships  each  partner  has  a 
joint  interest  in  the  partnership  stock,  and  each  can  convey  to  a 
third  person  the  title  of  the  whole  stock.  So,  also,  may  each 
partner  create  any  amount  of  indebtedness  on  account  of  the 
partnershij),  and  give  notes,  or  accept  drafts,  to  any  amount,  in 
the  name  of  the  partnership,  for  the  payment  of  which  not  only 
will  the  partnership  property  be  liable,  but  also  the  individual 
property  of  each  partner.  In  general,  partners  cannot  bring  an 
action  at  law  against  each  other  for  anything  done,  or  omitted, 
in  the  partnership  affairs,  during  the  continuance  of  the  partner- 
ship. Every  person  who  becomes  a  partner  impliedly  promises 
to  do  all  he  can  to  promote  the  interests  of  the  business,  but  if 
one  partner  takes  all  the  responsibility,  and  does  all  the  work, 
while  another  neglects  his  duties,  he  cannot  recover  any  reward 
for  the  extra  services,  unless  there  was  a  previous  agreement  to 
that  effect. 

440.  Relations  of  Third  Persons.— Third  persons  have 

dealings  with   both   the    partners  and  the  partnership.     Their 


1 


I*    s' 


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f.-  r 

►4: 


174 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


dealings  with  the  partners  may  be  entirely  independent  of  the 
partnership,  so,  also,  their  dealings  with  the  partnership  may  be 
quite  independent  of  the  partners.  Third  persons  are  presumed 
to  know  what  the  partnership  business  is,  and  wliat  contracts 
they  have  a  right  to  make.  If  a  third  person  has  a  claim 
against  one  of  the  partners  of  a  firm,  he  cannot  receive  partner- 
ship goods  in  payment  of  the  debt,  unless  by  the  consent  of  all 
the  partners,  without  making  himself  liable  to  the  partnership, 
even  if  he  is  ignorant  of  its  being  partnership  property.  But  a 
partner  has  a  right  to  compound  a  debt  of  a  third  person,  and 
the  partnership  will  be  bound.  So  he  may  give  a  debtor  time 
by  taking  his  note,  payable  in  the  future  for  a  book  account 
already  due,  and  so  preclude  the  partnership  from  suing  until 
the  note  is  due. 

441.  Powers  of  Partners.— We  have  already  seen  that/^ 
each  partner  may  create  debts  in  the  name  of  the  partnershij>( 
to  any  amount.  He  is  the  accredited  agent  of  all  the  ])artners^' 
and  may  enter  into  any  engagements  or  contracts  in  the  ordi- 
nary trade  and  business  of  the  firm,  and  on  its  behalf,  such  as 
"  buying  and  selling,  or  pledging  goods,  or  by  paying  or  receiv- 
ing, or  borrowing  moneys,  or  by  drawing,  or  negotiating,  or  in- 
dorsing, or  accepting  bills  of  exchange,  and  giving  promissory 
notes  and  checks,  and  other  negotiable  securities,  or  by  procur- 
ing insurance  for  the  firm,  or  by  doing  any  other  acts,  which  are 
incident  or  appropriate  to  such  trade  or  business,  according  to 
the  common  course  and  usages  thereof."  Indeed,  there  is  scarcely 
any  limit  to  the  indebtedness  which  a  partner  may  create  against 
the  firm.  .; 

44*2.  31ode  of  Binding.— Ordinarily  a  partner  can  only 
bind  the  firm  by  simple  contract.  lie  cannot  bind  the  other 
partners  by  giving  a  deed,  or  by  contracts  under  sea/,  unless  au- 
thority has  been  expressly  given  him  under  seal  by  the  other 
parties.  There  is,  however,  an  exception  to  this  rule,  which  is 
found  in  the  right  which  a  partner  has  in  legally  releasing  a 
partnership  debt  under  seal. 

413.  In  Name  of  Partnership.— Generally,  in  order  to 
bind  the  firm,  the  contract  must  be  in  the  firm-name,  as  well  as 


i-. 


PARTNERSHIP. 


IVo 


for  the  benefit  of  the  firm.  ]>ut  there  are  some  exceptions  to 
this  rule,  and  if  the  contract  is  made  in  the  name  of  one  of  the 
partners,  for  and  in  behalf  of  the  firm,  and  for  its  benefit,  the 
partnership  will  be  bound.  So,  also,  where  drafts  drawn  upon 
the  firm  have  been  accepted  in  the  name  of  one  partner  and 
paid  by  the  firm,  it  will  be  liable  for  other  acceptances  of  the 
same  nature.  But  where  a  contract  is  made  for  the  benefit  and 
in  the  name  of  one  of  the  partners,  the  partner  alone  wdll  be 
Jiable. 

444.  On  Account  of  Partnership.— It  is  not  only  neces- 
sary that  the  contract  be  in  the  ?i«me  of  the  firm,  but  it  must 
also  be  on  account  of  the  partnership.  That  is,  it  must  be 
within  the  scope  of  the  partnership  business.  For  instance,  if  a 
partnership  were  organized  to  carry  on  a  dry-goods  business,  and 
one  of  the  partners  should  go  outside  and  purchase  grain  for 
speculation  without  the  consent  of  the  other  partners,  and  give 
notes  in  the  name  of  the  partnersliip  in  payment,  such  notes 
could  not  be  enforced  against  the  partnership.  But  if  the  pur- 
chase be  of  things  which  might  be  called  for  or  used  in  the 
business  at  some  time,  but  not  at  present  necessary,  the  firm 
would  be  bound  by  the  contract.  It  is  sometimes  difficult  to 
decide  just  what  acts  or  engagements  may  be  deemed  to  come 
within  the  scope  of  the  business. 

445.  Good   Faith  of  Third  Person.— Not  only  is   it] 

necessary  that  the  contract  be  made  in  the  name  and  in  behalf  [ 
of  the  firm,  but  the  third  person,  who  deals  with  the  partner- 
ship, must  deal  in  good  faith.  If  he  knew  the  partner  had  no 
authority  to  act  for  the  partnership,  or  had  good  reason  to  sup- 
pose he  was  not  authorized,  the  firm  will  not  be  bound  by  the 
contract.  But  where  the  transaction  comes  within  the  scope  of 
the  partnership  business,  and  the  contract  is  signed  by  the  part- 
ner in  the  firm-name,  and  the  third  party  deals  in  good  faith, 
the  partnership  will  be  bound,  even  though  the  partner  intended 
to  defraud  his  co-partners. 

446.  Contract  Jointly  and  Severally  Binding.— Each 

cf  the  partners,  as  well  as  all  of  them,  is  bound  by  a  contract 


is  :?S\  I 


^fi 


■     l« 


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,i 

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u. 


176  COMMERCIAL    LAW    AM)    BUSINESS    FORMS. 

of  the  partnership,  although  all  of  them  must  be  united  in  suing    U 
or  being  sued  upon  it.     Their  joint  property  in  the  partnership    ' 
is  liable  for  the  tirni  debt,  and  so,  also,  is  the  separate  property 
of  each   partner  liable  to  be  taken  in  payment  of  the   debt. 
And  this  may  briuix  about  a  conflict  between  creditors  in  case 
the  partnership  should  become  insolvent.     In  such  case  the  part- 
nership creditor  must  first  look  to  the  partnership  property  for 
indemnity  before  seizing  the  partner's  property.     And  the  part- 
ner's creditor  looks  to  the  partner's  property  before  he  can  apply  ^ 
the  firm's  property. 

447,  Retiriiis^  Partner's  Liability. — Every  partner  is 
liable  for  the  debts  contracted  by  the  firm  prior  to  his  retire- 
ment. A  dormant  partner  is  not  liable  for  partnership  debts  and 
contracts  made  before  he  retired,  provided  he  is  not  known  as  a 
partner;  but  if  he  is  known  only  to  a  few  persons,  those  few 
must  be  notified  of  his  retirement  from  the  firm,  or  he  will  still 
be  liable  to  them.  An  ostensible,  or  real  partner,  will  be  liable 
to  all  persons  who  have  dealt  with  the  firm,  for  all  debts  and 
contracts  until  such  persons  have  notice  of  his  retirement.  This 
results  from  the  principle,  "that  where  one  of  two  innocent  per- 
sons must  suffer  from  ij^ivincc  a  credit,  he  who  has  misled  the 
confidence  of  the  other,  and  has  been  the  cause  of  the  credit, 
either  by  his  representations,  or  his  negligence,  or  his  fraud, 
ought  to  suffer,  instead  of  the  other." 

And  if  a  real  partner  retires  from  the  partnership,  and  leave 
his  name  on  the  sign,  he  will  be  liable.  The  usual  notices  given 
on  retirement  of  a  partner  is  to  send  a  special  notice  to  all  the 
parties  who  have  had  dealings  with  the  firm,  and  to  insert  a  notice 
in  one  or  more  newspapers.  When  a  partnership  is  dissolved  by 
the  death  of  one  of  the  partners,  or  by  operation  of  law,  no  notice 
is  required,  yet  it  is  customary  even  then  to  give  notice,  and  in 
any  case  it  may  be  considered  a  judicious  precaution. 


448.  Dissolution  of  Partnership. — A  partnership  may 
be  dissolved:  First,  by  mutual  agreement ;  second,  by  expiror 
lion  of  time  ;  third,  by  insolvency  /  fourth,  by  acts  of  partners ; 
fifth,  by  com.pletion  of  bus  mess ;  sixth,  hy  mar  riar/e  ;  seventh, 
by  death;  eighth,  by  insanify  ;  ninth,  by  decree  of  court. 


PARTNERSHIP. 


177 


449.  By  Mutual  Consent.— Any  partnership,  whether  it 
is  for  a  limited  period,  or  at  will,  may  at  any  time  be  dissolved 
by  the  mutual  consent  of  all  the  partners.  Such  a  dissolution, 
as  between  the  parties,  and  as  to  third  persons  who  have 
received  notice  thereof,  will  be  held  in  equity  perfect  and 
complete. 

450.  By  Expiration  of  Time.— When  a  partnership 
agreement  provides  that  it  shall  terminate  after  the  expiration 
of  a  specified  time,  it  is  terminated  at  that  time  by  the  terms  of 
the  contract.  It  cannot  be  presumed  to  exist  by  their  consent 
after  the  period  fixed.  If,  however,  the  partners,  instead  of 
taking  measures  to  wind  up  their  affairs,  continue  to  carry  on 
the  business,  the  partnership  is  continued  indefinitely  under  the 
original  agreement. 

451.  By  Insolvency.— The  insolvency  of  one  of  the  part- 
ners will  produce  dissolution,  because  he  is  divested  of  his  prop- 
erty, which  passes  into  the  hands  of  an  assignee,  who  has  entire 
control  of  it;  and  the  assignee  is  not  obliged  to  become  a  part- 
ner, nor  are  the  partners  obliged  to  admit  him  as  such. 

45*1.    By  Act  of  Partner.— It  has  been  held  that  a  partner  > 
may  renounce  the  partnership,  whether  it  be  for  a  fixed  period, 
or  is  a  partnership  at  will,  provided  he  does  it  in  good  faith,  and 
for  a  reasonable  cause,  and  at  a  reasonable  time,  and  in  a  reason- 
able manner. 

453.  By  Completion  of  Business.— As  where  two  per- 
sons should  jointly  purchase  a  ship  to  be  employed  by  them  for 
their  mutual  profit,  as  partners,  and  the  ship  should  be  totally 
lost.  Or  where  two  or  three  persons  agree  to  sell  goods  on  joint 
account  for  their  mutual  benefit  and  profit,  and  the  goods  are 
all  sold  and  proceeds  divided. 

454.  By  Marriage.— At  common  law  the  marriage  of  a 
female  partner  will  work  a  dissolution  of  the  partnership,  for 
the  reason  that  the  marriage  creates  a  positive  personal  incapac- 
ity on  her  part  to  bind  herself  by  any  contract. 


fj! 


ill 


I 


n 


i  i 


i 


I    I 


178 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


455.  T?V  Poatli.— The  death  of  one  of  the  partners  will 
work  a  dissohition  of  tlie  partnershii>,  no  matter  how  many  part- 
ners there  may  be.  The  reason  is  said  to  be  that  "  the  personal 
qualities,  diligence,  skill,  and  superintendence  of  each  of  the 
partners  are  presumed  to  enter  into  and  constitute  a  material 
consideration  with  all  the  other  partners  for  engaging  in  the 
partnership,"  Therefore,  the  other  partners  ought  not  to  be 
bound  to  continue  without  a  new  agreement. 

456.  By  Insanity.— Insanity  is  not  a  sufficient  cause  for 
a  dissolution  if  it  is  temporary,  or  if  it  be  an  occasional  malady, 
or  accidental  illness;  but,  if  it  be  long  continued,  and  incurable, 
it  will  be  a  sufficient  reason. 

457.  By  Decree  of  Conrt.— A  court  of  equity  may  some- 
times decree  a  dissolution  on  the  ground  of  gross  misconduct, 
or  fraud,  or  violation  of  duty,  of  one  of  the  partners.  But  for 
trivial  neglect,  or  departure  from  duty,  it  will  not  interfere. 

458.  Consequences  of  Dissolution.— Immediately  upon 
the  dissolution  of  the  partnen^liip  the  power  of  any  one  of  the 
partners  to  bind  the  firm  ceases.  The  relations  of  the  parties 
as  partners  are  at  an  end.  They  are  no  longer  joint  tenants  in 
the  capital  stock,  but  are  tenants  in  common.  One  of  the  con- 
seqnences  of  a  dissolution  is  the  necessity  of  promptly  closmg 
up  the  partnership  business,  and  disposing  of  the  effects  of  the 
partnership.  If  the  partners  are  not  able  to  agree  upon  a  divi- 
sion of  the  effects,  then  there  is  no  other  way  but  to  sell  them 
at  a  public  auction  and  divide  the  proceeds,  in  order  to  get  at  an 
equal  and  just  division  of  the  property. 

FoKM  Xo.  71. 
459.   Articles  of  Copartnership. 

Tills   AC(VCCmCUt    '^'QXxt\\CSSCt\XfThaton(hel5fh 

'  day  of  December  A.  D.,  1SS2,  Jo^ph  Ailams,  Daricin  Coleman, 

and  Henry  Sexton,  all  of  the  City  of  Detroit,  Michigan,  agree 

to  form,  and  do  form,  a  copartnership  for  the  term  of  five  years, 

to  commence  on  the  first  day  of  January  A,  D.,  1883,  for  the 


PARTNERSHIP. 


119 


purpose  of  carrying  on  the  business  of  manufacturing  flour  and 
buying  and  selling  grain  and  feed,  which  said  business  is  to  be 
carried  on  in  the  City  of  Detroit,  in  the  mill  known  as  the 
"  Globe  Mill;'  on  the  following  terms  and  conditions,  to  the  faith- 
ful performance  of  which  the  said  parties  do  hereby  mutually 
engage  and  bind  themselves :    The  style  and  name  of  the  copart- 
nership shall  be  "  The  Globe  Mill  Cor     The  capital  stock  of  said 
copartnership  shall  be  one  hundred  thousand  dollars,  and  shall  be 
contributed  by  the  said  parties  in  the  proportion  followiyig,  viz.  : 
The  said  Joseph  Adams  shall  contribute  the  sum  of  forty  thou- 
sand dollars,  the  said  Darwin  Coleman  shall  contribute  the  sum 
of  thirty -three  thousand  dollars,  and  the  said  Henry  Sexton  shall 
contribute  the  sum  of  twenty-seven  thousand  dollars,  to  the  said 
capital  stock,  to  be  used,  employed  and  expended  in  the  support 
and  management  of  said  business,  to  the  mutual  benefit   and 
advantage  of  said  parties. 

The  said  parties  shall  do  their,  and  each  of  their,  best  endeav- 
ors, and  shall  generally,  and  at  all  times,  exert  themselves  for  the 
joint  interest,  profit,  benefit  and  advantage  of  the  copartnership. 

The  particular  duties  of  the  said  parties  to  the  said  copartner- 
ship business  shall  be  a^  follows:    The  said  Joseph  Adams  shall 
make  all  tJm  purchases  and  all  sales  and  have  a  general  sujyervis- 
ion  of  the  busi?iess  of  the  copartnership  ;   the  said  Darwin  Cole- 
man shall  have  charge  of  the  office  and  counting-rooni  of  the 
said  copartnership  and  their  books  of  account,  and  shall  have 
the  custody  of  the  copartnership's  money  and  funds,  and  shall 
receive  and 2my  out  the x>artner ship  moiieys  and  have  the  general 
direction  and  management  of  the  financial  transactions  of  said 
business;  the  said  Henry  Sexton  shall  have  the  immediate  super- 
intendence, maiiagement  and  direction  of  the  practical  operation 
of  said  MiU  and  of  the  work  done  by  said  copartnership.     All 
gains,  profits  and  increase  that  shall  come,  grow  or  arise  from  or 
by  means  of  the  business  of  said  copartnership  shall  be  divided 
betioeen  tJw  said  parties  in  the  proportion  which  the  amount  of 
capital  stock  contributed  by  each  partner  respectively  as  above 
specified  shall  bear  to  the  whole  amount  of  said  Capital  Stock, 
and  all  losses  that  shall  happen  to  the  said  business  shall  be  bom^ 
and  paid  by  the  said  copartners  in  a  like  proportion. 


••J 


\\ 


1 ; 


180 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


1^ 

if  i- 
I 

1      . 


-«J 


4 


And  it  is  further  agreed^  by  and  between  the  said  parties^  that 
there  shall  be  had  and  kept  at  all  times,  during  the  continua^ice 
of  their  copartnership,  perfect,  just  and  true  books  of  account 
wherein  shall  be  eritered  and  set  down  as  well  all  money  by  said 
partners  or  either  of  them  received  or  expended  in  and  about  said 
business,  as  also  all  grain  commodities  and  merchandise  bought 
or  sold  by  them  or  either  of  them  by  reason  or  on  account  of  said 
business  and  all  other  matters  and  things  whatsoever  to  the  said 
business,  arid  the  management  thereof  in  any  wise  belongifig; 
ichich  said  books  shall  be  used  in  common  between  the  said  co- 
partners, so  tJuit  either  of  them  may  have  access  thereto  without 
any  interruption  or  hindrajice  of  the  other.  And  also  the  said 
copartners  once  in  each  year  during  the  continuance  of  said  co- 
partnership {to-wit  on  the  first  day  of  January  once  in  each 
year),  or  more  often  if  necessary,  shall  make,  yield  and  render 
each  to  the  other  a  true,  just  and  perfect  inventory  and  account 
of  all  the  profits  and  increase  by  them  or  either  of  them  made, 
and  of  all  loss  by  them  or  either  of  thetn  sustained,  and  also  of 
all  payments,  receipts  and  disbursements  and  of  all  other  things 
by  them  made,  received,  disbursed,  acted  or  suffered  in  their  said 
copartnership  and  business,  and  the  same  accounts  being  so  tnade 
they  shall  and  will  clear  and  adjust,  pay  and  deliver  each  to  the 
other  at  the  time  their  just  share  of  the  profits  so  made  as  afore- 
said. And  the  said  parties  hereby  mutually  covenant  and  agree 
to  and  with  each  other  that  during  the  continuance  of  the  said 
copartnership  no  chattel  mortgage,  bill  of  sale,  assignment  or 
other  transfer  shall  be  made  of  their  interest  or  of  any  part 
of  the  interest  of  either  in  the  property  or  business  of  said  firm, 
without  the  consent  of  the  others. 

IN  WITNESS  Whereof,  The  said  parties  to  these  presents 
have  hereunto  set  their  hands  and  seals  this  fifteenth  day  of  De- 
cember, 1882, 


€imd 


/ 


d-Le^ntzn 


7 


-e-^'ii^'^^t. 


AGREEMENTS  FOR  PERSONAL  SERVICES. 


+  ■', 


■*♦»• 


460.  Services  and  Wages. — Every  employee  or  servant 
is  the  agent  of  the  principal  who  employs  him,  and  the  law  re- 
lating to  principal  and  agent  will  generally  be  applicable  to  all 
those  cases  where  personal  services  are  rendered  for  wages.  All 
agreements  to  work  for  a  salary  or  a  specified  compensation, 
come  under  the  same  general  principles,  and  are,  in  fact,  a  hiring 
of  personal  services  for  a  compensation.  If  there  be  a  special 
agreement  that  the  services  sliall  be  given  for  a  specified  length 
of  time,  at  a  given  price,  then  the  contract  must  be  complied 
with.  But  if  the  hiring  be  general,  without  any  special  agree- 
ment as  to  the  time,  then  it  is  usually  considered  to  be  for  one 
year.  And  if  the  servant  or  employee  continue  to  serve  in  the 
same  capacity  more  than  a  year,  without  any  new  agreement, 
there  is  an  implied  contract  for  another  year. 

461,  Domestic  Servants. — In  most  cases  with  domestic 
servants  the  time  is  regulated  by  the  custom  of  paying  the 
wages  periodically,  as  iceekly  wages  or  monthly  wages,  in  which 
case,  if  there  be  no  definite  understanding  about  time,  it  will  be 
only  a  weekly  or  monthly  hiring,  and  if  the  services  are  con- 
tinued, it  will  be  a  succession  of  weekly  or  monthly  hirings,  and 
at  the  end  of  each  week  or  month,  as  the  case  may  be,  either  the 
employer  or  the  employee  may  terminate  the  contract,  but  it  is 
customary  for  the  party  who  w'  shes  the  contract  terminated  to 
give  notice  to  the  other  party  some  days  or  weeks  before  such 
termination. 

46*3,  Wages  or  Compensation.— When  a  person  engages 

or  employs  the  services  of  another,  there  is  always  an  express  or 
implied  promise  to  pay  for  such  services.  Where  there  is  no 
agreement  as  to  the  amount  of  compensation  to  be  paid,  the  rule 

181 


1  m 


m 


182 


COMMERCIAL    LAW    AND    BUSINESS    rORMS. 


I  •! 


■  i 


i.     • .  Im 


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.  •  r 


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I  , 
I    I 


is  that  the  employer  must  pay  what  it  is  customary  for  others  to 
pay  for  the  same  kind  of  services,  or  what  such  services  are 
really  worth.  Generally  the  wages  are  not  due  the  employee 
until  the  w^ork  is  completed,  or  the  time  for  which  he  was  hired 
is  completed,  unless  there  w^as  an  agreement  to  pay  in  advance,  • 
or  unless  the  payment  is  regulated  by  well-established  custom. 
Where  services  are  rendered  without  any  agreement  as  to  price, 
the  employer  must  generally  pay  what  the  services  are  worth, 
unless  there  are  circumstances  which  show  that  the  service  was 
to  be  gratuitous,  as  where  a  person  does  something  for  a  rela- 
tive. 

46JI.  Necessary  Skill.— Skill  is  frequently  an  important 
element  in  the  performance  of  services  w^hich  are  to  be  ren- 
dered. The  party  who  engages  to  do  anything  must  bring  to 
his  undertaking  the  necessary  amount  of  skill  for  the  employ- 
ment which  he  undertakes.  If  his  services  are  professional,  as  a 
surgeon,  he  must  bring  to  bear  "  that  amount  of  skill  and 
knowledge,  which  the  leading  authorities  have  pronounced  as 
the  result  of  their  researches  and  experience,  up  to  the  time,  or 
within  a  reasonable  time,  before  the  issue  or  question  to  be  de- 
termined." If  a  mechanic  undertake  to  make  a  thing  for  a  par- 
ticular purpose,  and  it  is  not  suitable  for  the  purpose,  he  cannot 
collect  anything  for  his  wages.  But  it  is  only  ordinary  skill  that 
can  be  required  of  a  domestic  servant. 

464.  Ordinary  Care. — Where  the  labor  or  service  is  to  be 
performed  about  property,  the  employee  is  bound  to  take  ordi- 
nary care  of  the  property;  that  is,  as  much  care  as  a  man  of 
common  prudence  would  take  of  his  own  property.  And  if  by 
neglect  of  such  care  the  property  is  injured,  he  will  be  liable  to 
the  employer  for  damages. 

46o.  Rights    and   Duties    of  Employer.— Where  the 

agreement  is  that  the  services  shall  continue  for  a  year,  at  a 
stipulated  price,  the  employer  is  bound  to  continue  his  engage- 
ment to  pay  for  the  full  year,  and  if  he  discharges  the  employee 
before  the  expiration  of  the  year  he  will  generally  be  held  liable 
for  the  wages,  and  the  measure  of  wages  or  damages  woulc^  be 


AGREEMENTS    FOR   PERSONAL    SERVICES. 


183 


the  full  amount  of  salary  or  wages  agreed  upon,  unless  it  should 
be  reduced  by  his  proving  that  the  employee  had  earned,  or 
might  have  earned,  money  in  the  same  or  some  other  business. 
Where  there  is  no  agreement  as  to  the  amount  of  wages  to  be 
paid,  the  employer  must  pay  what  such  services  are  worth.  An 
employer  is  not  bound  to  provide  medical  attendance  for  an  em- 
ployee in  case  he  is  ill. 

466.  Rights  and  Duties  of  Employees.— The  employee 

is  bound  to  perform  the  service  he  engaged  to  do,  and  if  he  en- 
gaged for  a  specified  time,  he  is  bound  to  continue  the  whole 
time,  and  if  he  leave  before  the  expiration  of  the  time  he  is  not 
entitled  to  any  compensation  for  the  services  rendered.     If  he 
hire    for  a  month,  and  leaves  at  the  expiration  of  three  weeks, 
he  is  not  entitled  to  any  wages  for  the  three  weeks.     Or,  if  he 
engage    for  a  year,  with  the  understanding  that  the  wages  are  to 
be  paid  at  the  close,  without  any  provision  for  terminating  the 
contract  before  the  expiration  of  the  year,  and  leave  at  the  end 
of  eleven  months,  he  will  not  be  entitled  to  any  wages.     And  so 
if  one  work    by  the  job,  and  undertake  to  do  a  certain  piece  of 
work  for  a  certain  price,  he  is  not  entitled  to  any  compensation 
until  the  job  is  completed.     But  if  he  undertake  a  job,  and  is 
doing  it  properly,  and  is  discharged  before  it  is  completed,  he  is 
entitled  to  the  whole  price.     The  employee  is  bound  to  obey  all 
just  and  reasonable  commands  of  the  employer,  and  to  do  all  his 
proper  work  with  diligence  and  care.     If  he  disobey  a  just  and 
reasonable  command,  which  comes  within  the  scope  of  his  em- 
ployment, it  will  be  a  sufficient  reason  for  his  discharge.     If  the 
employer  refuse  to  give  his  permission  to  the  employee's  being 
absent  for  a  time,  he  will  not  be  justified  in  leaving,'  except  for 
some  extraordinary  circumstance. 

467.  Lien  for  Services.— We  have  already  seen  under 
the  general  subject  of  lien  that  a  mechanic  or  other  person  who 
does  work  upon  property,  which  he  has  in  his  possession,  may 
hold  the  property  by  right  of  lien  to  secure  payment  for  such 
services.  Thus,  a  blacksmith  has  the  right  of  lien  on  a  horse  for 
his  shoeing,  and  a  shoemaker  who  works  up  material  furnished  by 
his  employer  into  shoes  has  a  lien  upon  the  shoes  for  his  wages. 


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184  COMMERCIAL  LAW   AND   BUSINESS  FORMS. 

468.  Termination  of  Serviees.-Where  the  Wring  is  for 
a  definite  period  of  time,  either  party  may  terminate  the  con- 
tract when  the  time  expires,  without  giving  any  notice    o  the 
otlier.     And  where  the  agreement  is  for  a  specihc  time,  but  be 
fore  the  expiration  of   the  time  the  contract  is  disso  ved  by 
mutual  agreement  between  the  parties  the  employee  will  be  en- 
titled  to  his  wages  up  to  the  time  of  such  dissolution.     If    he 
employer  has  good  reason  for  discharging  the  employee,  he  need 
not  state  the  reason.     But  for  the  convenience,  and  as  a  matter 
of  justice  to  both  parties,  it  is  generally  better  to  notify  each 
other  of  the  intent  to  terminate  the  contract. 

Form  No.  72. 
.|«0.  Contract  for  Hirini;  a  Laborer. 
TTt-lS  AOVCCinCnt  uuukttds  first  day  of  January,  1883, 
between  P<arU-k  Uolan,  the  party  of  the  first  part,  and  Henry  J. 
Jackson,  the  party  of  the  second  part, 

^lltUCSSCtU,  that  the  said  party  of  the  first  part  ayre«$ 
to  ^ork  faithfully  for  the  said  party  of  the  second  part  as  ge,^^r<d 
Uhorerin  and  about  his  store  and  on  andahout  hcsf.r,,,  at  any 
,cork  he  may  be  called  upon  to  do  in  connection  therercMjn  the 
township  of  Amherst,  County  of  Lorain,  and  State  ofOlno,for 
Zperfodof  one  year  from  and  after  the  first  day  of  January 
1883,  for  the  mm  of  Thirty  five  Dollars  per  month.    Inconsidera- 
tion  of  the  service,  to  be  performed,  the  said  Henry  J.  JarMson 
party  of  the  second  part,  agrees  to  pay  the  satd  Patrick  Dolan, 
party  of  first  part,  the  mm  of  Thirty  five  Dollars  per  month,  pay- 
Me  as  Mom:   Thirty  five  dollars  on  the  first  day  of  February, 
and  Thirty  five  Dollars  on  the  first  day  of  each  successtve  follow. 
ing  month  until  the  termination  of  this  contract  and  tl^  full 
payment  thereof  is  made. 

%n  'SailtUCSS  ^mUCVCOf ,  the  said  parties  have  here- 
unto set  their  hands  this  first  day  of  January,  1883. 


S^a/uoi 


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COPYRIGHT. 


470,  Copyright. — A  copyright  is  the  right  which  is  se- 
cured by  the  government  to  the  author,  or  some  other  person,^  to 
publish  and  sell  a  certain  book  or  other  work  to  the  exclusion  of 
all  other  persons.  This  right  is  granted  for  a  term  of  twenty- 
eight  years  with  the  privilege  of  a  renewal  at  the  expiration  of 
that  time  for  an  additional  fourteen  years.  The  following  are 
the  Government  regulations  under  the  revised  acts  of  Congress 
for  securing  copyrights: 

47 1 ,  Printed  Title. — "  A  printed  copy  of  the  title  of  the 
book,  map,  chart,  dramatic  or  musical  composition,  engraving, 
cut,  print,  photograph,  or  a  description  of  the  painting,  draw- 
ing, chromo,  statue,  statuary,  or  model,  or  design,  for  a  work  of 
the  fine  arts,  for  which  copyright  is  desired,  must  be  sent  by 
mail  or  otherwise,  prepaid^  addressed  Librarian  of  Congress, 
Washington,  D.  C.  This  must  be  done  before  publication  of 
the  book  or  other  article.  The  printed  title  required  may  be  a 
copy  of  the  title-page  of  such  publications  as  have  title-pages. 
In  other  cases,  the  title  must  be  printed  expressly  for  copyright 
entry.  The  style  of  type  is  immaterial,  and  the  print  of  the 
type-writer  will  be  accepted.  But  each  title  must  be  printed  on 
paper  as  large  as  commercial  note. 

472,  Fees. — "  A  fee  of  fifty  cents,  for  recording  the  title 
of  each  book  or  other  article,  must  be  inclosed  with  the  title  as 
above,  and  fifty  cents  in  addition  (or  one  dollar  in  all)  for  each 
certificate  of  copyright  under  seal  of  the  Librarian  of  Con- 
gress, which  will  be  transmitted  by  early  mail. 

473,  Copy  of  Books. — "Within  ten  days  after  publica- 
tion of  each  book  or  other  article,  two  complete  copies  of  the 
best  edition  issued  must  be  sent,  to  perfect  the  copyright,  with 

185 


]S6 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


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the  address,  *  Librarian  of  Congress,  Washington,  D.  C  The 
postage  must  be  prepaid,  or  else  the  publications  inclosed  in 
parcels  covered  by  printed  Penalty  Labels,  furnished  by  the 
Librarian,  in  which  case  they  will  come  free  by  mail,  according 
to  rulings  of  the  Post-office  Department.  Without  the  deposit 
of  copies  above  required  the  copyright  is  void,  and  a  penalty 
of  $25  is  incurred.  No  copy  is  required  to  be  deposited  else- 
where, 

474.  Notice  of  Copyright. — "No  copyright  is  valid  un- 
less notice  is  given  by  inserting  in  every  copy  published,  on  the 
title-page  or  the  page  following,  if  it  be  a  book;  or,  if  a  map, 
chart,  musical  composition,  print,  cut,  engraving,  photograph, 
painting,  drawing,  chromo,  statue,  statuary,  or  model,  or  design, 
intended  to  be  perfected  as  a  work  of  the  fine  arts,  by  inscribing 
upon  some  portion  thereof,  or  on  the  substance  on  which  the 
same  is  mounted,  the  following  words,  viz.:  ^Entered  according 

to  act  of  Congress,  in  the  year ,  bg ,  in  the  office 

of  the  Librarian  of  Congress,  at  Washington,''  or,  at  the  option 
of  the  person  entering  the  copyright,  the  words:  *  Copyright, 
18-  by : 

" The  law  imposes  a  penalty  of  llOO  upon  any  person  who 
has  not  obtained  copyright  who  shall  insert  the  notice  *  En- 
tered according  to  act  of  Congress,''  or  *  Copyright,^  etc.,  or 
words  of  the  same  import,  in  or  upon  any  book  or  other  article. 

475.  Translations. — "Any  author  may  reserve  the  right 
to  translate  or  to  dramatize  his  own  work.  In  this  case, 
notice  should  be  given  by  printing  the  words  '■Right  of  trans- 
lation reserved^  or  ^All  rights  reserved,^  below  the  notice  of 
copyright  entry,  and  notifying  the  Librarian  of  Congress  of 
such  reservation,  to  be  entered  upon  the  record. 

476.  Duration  of  Copyright. — "The  original  term  of 
copyright  runs  for  twenty-eight  years.  Within  six  months  be- 
fore the  end  of  that  time,  the  author  or  designer,  or  his  widow, 
or  children,  may  secure  a  renewal  for  the  further  term  of  four- 
teen years,  making  forty-two  years  in  all. 


i'if! . 


COPYRIGHT. 


187 


477.  Renewals. — "Applications  for  renewal  must  be  ac- 
companied by  explicit  statement  of  ownership,  in  the  case  of 
the  author,  or  of  relationship,  in  the  case  of  his  heirs,  and  must 
state  definitely  the  date  and  place  of  entry  of  the  original  copy- 
right. 

478.  Time  of  Publication.— "  The  time  within  which 
any  work  entered  for  copyright  may  be  issued  from  the  press  is 
not  limited  by  any  law  or  regulation,  but  depends  upon  the  dis- 
cretion of  the  proprietor.  A  copyright  may  be  secured  for  a 
projected  work  as  well  as  for  a  completed  one. 

479.  Assignment.— "A  copyright  is  assignable  in  law 
by  any  instrument  of  writing,  but  such  assignment  must  be  re- 
corded in  the  office  of  the  Librarian  of  Congress  within  sixty 
days  from  its  date.  The  fee  for  this  record  and  certificate  is  one 
dollar,  and  for  a  certified  copy  of  any  record  of  assignment  one 
dollar. 

480.  Duplicate    Certificates.— "A   copy  of  the  record 

(or  duplicate  certificate)  of  any  copyright  entry  will  be  fur- 
nished, under  seal,  at  the  rate  of  fifty  cents  each. 

481.  Serials  or  Separate  Publications.— "In  the  case 

of  books  published  in  more  than  one  volume,  or  of  periodi- 
cals published  in  numbers,  or  of  engravings,  photographs,  or 
other  articles  published  with  variations,  a  copyright  is  to  be  en- 
tered with  each  volume  or  part  of  a  book,  or  number  of  a  peri- 
odical, or  variety,  as  to  style,  title,  or  inscription,  of  any  other 
article. 

482.  Copyrights  for  Works  of  Art.— "To  secure  a 
copyright  for  a  painting,  statue,  or  model,  or  design,  intended  to 
be  perfected  as  a  work  of  the  tine  arts,  so  as  to  prevent  infring- 
ment  by  copying,  engraving,  or  vending  such  design,  a  definite 
description  must  accompany  the  application  for  copyright,  and  a 
photograph  of  the  same,  at  least  as  large  as  'cabinet  size,'  should 
be  mailed  to  the  Librarian  of  Congress  within  ten  days  from  the 
completion  of  the  work  or  design 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


483.  No  Labels  Copyrit^ht.—  '*  Copyrights  cannot  be 
granted  upon  Trade-marks,  nor  upon  Labels  intended  to  be  used 
with  any  article  of  manufacture.  If  protection  for  such  prints 
or  labels  is  desired,  application  must  be  made  to  the  Patent 
Office,  where  they  are  registered  at  a  fee  of  $6  for  labels  and 
$25  for  trade-marks. 

484.  Full   Name  of   Proprietor    Beciuired.— "  Every 

applicant  for  a  copyright  must  state  distinctly  the  name  and 
residence  of  the  claimant,  and  whether  the  right  is  claimed  as 
author,  designer,  or  proprietor.  No  affidavit  or  formal  applicar 
tion  is  required." 


BAILMENTS. 


485.  Bailment. — A  bailment  is  a  delivery  of  goods  or  chat- 
tels, for  some  special  purpose,  upon  a  contract  which  is  either 
express  or  implied,  to  be  held  for  the  purpose  for  which  they 
"Were  delivered,  and  to  be  returned,  or  in  some  manner  disposed 
of,  when  the  purpose  for  which  they  were  delivered  has  been 
fulfilled.  There  are  two  parties  to  a  bailment;  lirst,  the  bailor, 
or  the  person  who  delivers  the  goods;  second,  the  person  who 
"»*eceives  the  goods,  called  the  bailee, 

486.  Subject-Matter.— The  subject-matter  of  the  bail- 
ment may  consist  of  personal  property,  or  personal  services 
-^hich  are  hired  about  the  property.  The  undertaking  to  per- 
fonn  the  trust  needs  no  consideration  except  the  delivery  and 
acceptance  of  the  goods,  and  the  bailor  has  a  legal  right  to  in- 
sist upon  the  fulfillment  of  the  trust  by  the  bailee.  A  farmer 
delivers  wheat  to  a  miller  to  be  manufactured  into  flour,  and  the 
miller  takes  the  wheat  and  agrees  to  return  a  barrel  of  super- 
fine flour  for  every  three  and  three-fourths  bushels  of  wheat. 
This  is  a  bailment,  because  the  wheat  is  delivered  for  a  special 
purpose,  and  the  same  property,  although  in  a  changed  condi- 
tion, is  to  be  returned  by  the  bailee  to  the  bailor.  But  if  the 
miller  had  merely  agreed  to  give  so  much  flour  for  the  wheat, 
without  any  understanding  that  the  flour  was  to  be  manufac- 
tured from  the  wheat,  then  it  would  be  barter  instead  of  a  bail- 
ment; that  is,  an  exchange  of  property,  instead  of  a  return  of 
the  same  property. 

487.  Different  Kinds  of  Bailment.— Bailment  is  gen- 
erally divided  into  five  different  kinds,  viz.;  deposit^  mandatey 
loan  for  use,  pledge  or  pawn,  and  hiring.  Each  of  these  five 
kinds  of  bailment  is  influenced  by  some  kind  of  benefit,  and  the 
benefit  is  of  three  different  kinds,  viz.:  first,  where  it  is  exclu- 

189 


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190 


COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


sively  for  the  bailor,  or  a  third  party;  second,  where  it  is  for  the 
bailee;  and,  third,  where  it  benefits  both  parties. 

488.  Diligence  and   Neglect.— Where  the  bailor  is  to 

receive  all  the  benefit  of  the  bailment,  only  slight  diligence  is 
required  of  the  bailee,  and  he  is  accountable  only  for  gi'oss 
neglect.  Where  the  benefit  is  exclusively  for  the  bailee,  (/reat 
diligence  is  required  of  him,  and  he  is  answerable  for  sli(/ht 
neglect.  Where  the  bailment  is  for  the  benefit  of  both  the 
bailor  and  bailee,  only  ordinary  diligence  is  required  of  the 
bailee,  and  he  is  only  liable  for  ordinary  neglect. 

Ordinary  neglect  is  the  omission  of  that  kind  of  care  which  a 
man  of  common  prudence  takes  of  his  own  property.  Gross 
neglect  is  the  omission  of  that  care  which  a  man  of  common 
sense,  however  careless,  takes  of  his  own  affairs. 

Slight  neglect  is  the  omission  of  that  care  which  a  very  par- 
ticular and  prudent  person  takes  of  his  own  property.  But 
diligence  generally  depends  much  upon  the  nature  and  value  of 
the  bailment,  and  also  upon  the  customs  of  trade. 

489.  Deposit. — A  deposit  is  the  keeping  of  goods  or  chat- 
tels for  the  bailor  by  the  bailee,  without  compensation,  to  be 
returned  when  called  for.  It  is  a  voluntary  undertaking  on  the 
part  of  the  bailee,  and  the  trust  is  to  be  fulfilled  without  any 
reward.  The  parties  to  this  bailment  are  called  the  depositor 
and  the  depositary.  The  depositary  undertakes  the  keeping  of 
the  goods,  and  to  exercise  over  them  reasonable  care,  which  re- 
quires only  slight  diligence,  and  he  is  only  liable  for  gross 
neglect.  A  deposit  can  be  made  in  respect  only  to  personal 
property,  and  may  be  made  by  any  person  competent  to  make 
a  contract.  The  depositor  need  not  be  the  owner  of  the  prop- 
erty deposited,  it  is  sufiicient  to  have  possession  of  the  property. 
But  the  rightful  owner  may  demand  and  recover  it  from  the 
depositary.     The  benefit  is  to  the  depositor. 

490.  Specific  Object.— The  specific  object  of  the  deposit 
is  that  the  goods  shall  be  kept  voluntarily  and  gratuitously,  and 
that  the  very  goods  shall  be  returned  in  'the  same  condition,  as 
nearly  as  possible,  as  when  deposited.     As  a  general   rule,' no 


BAILMENTS. 


191 


person  is  obliged  to  become  a  depositary  in  opposition  to  his 
own  will,  but  his  consent  need  not  always  be  expressly  given,  it 
may  sometimes  be  inferred  from  circumstances,  as  where  timber, 
floating  in  a  river,  drifts  upon  a  person's  land.  So  a  person  find- 
ing property  assumes  the  responsibilities  of  a  depositary. 

491.  Use  of  Deposit. — Generally  the  depositary  has  no 
right  to  use  the  deposit,  especially  where  it  would  suffer  injury, 
or  be  liable  to  loss  from  the  using;  but  if  the  use  is  beneficial  to 
the  deposit,  as  the  exercising  of  a  horse,  and  advantageous  to 
the  depositor,  he  has  an  implied  right  to  use  it. 

492.  Return  of  Deposit. — The  depositary  must  return 
the  identical  thing  deposited  when  called  for  by  the  depositor. 
A  deposit  of  goods  is  different  from  a  deposit  of  money  in  a 
bank,  which  latter  is  in  law  called  a  mutuum,  and  the  same  money 
need  not  be  returned,  but  the  same  goods  must  be,  and  in  as 
good  condition  as  when  received,  except  natural  waste  or  decay. 
But  if  the  deposit  be  of  a  perishable  nature,  and  is  likely  to 
become  worthless,  he  may  sell  it  and  return  the  proceeds 
instead. 

493.  Excused  from  Returning.- The  depositary  is  some- 
times excused  from  returning  the  deposit;  as,  first,  where  it  was 
destroyed  by  inevitable  accident;  second,  where  it  has  perished 
from  its  own  inherent  defects;  third,  where  it  was  destroyed  by 
reason  of  its  perishable  nature;  fourth,  where  the  loss  was  owing 
to  the  slight  neglect  of  the  depositary. 

494.  Delivery  to  the  Owner.— The  depositor  is  not  al- 
ways the  owner  of  the  thing  deposited,  and  where  the  rightful 
owner  demands  the  delivery  of  the  deposit,  and  proves  his  title 
thereto,  the  depositary  will  be  under  obligation  to  deliver  the 
deposit  to  him,  and  the  fact  of  his  having  so  delivered,  will  be  a 
sufficient  answer  to  a  demand  made  by  the  depositor. 

495.  Liability  of  Depositary.— If  the  depositary  refuse 
to  return  the  deposit,  without  some  good  reason,  he  is  liable  to 
the  depositor,  as  for  a  conversion  of  the  property  to  his  own 
use,  but  generally  he  is  not  liable  unless  he  be  guilty  of  some 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


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default,  or  of  gross  negligence,  by  reason  of  which  the  deposit 
suffered  loss. 

490.  Mandate. — A  mandate  is  a  bailment  of  some  personal 
property,  upon  or  about  which  the  bailee  agrees  to  do  some  act, 
or  work,  without  recompense.  In  the  deposit,  the  keeping  of  the 
thing  is  the  principal  object,  and  the  labor  and  care  that  may  be 
necessary  are  only  incidental;  whereas,  in  the  mandate,  the  labor 
is  the  principal  thing,  and  the  custody  is  only  incidental.  A 
mandate  is  m  respect  to  a  legal  and  definite  act  to  be  done  in 
the  future,  and  is  made  by  an  express  or  implied  contract.  It  is 
governed  by  the  same  general  rules  as  the  deposit ;  both  are  gra- 
tuitous undertakings.  In  the  mandate  the  person  employing  is 
called  the  mandator^  and  the  person  employed  is  called  the  man- 
datary 

497.  Elements  of  a  Mandate. — There  are  three  necessary 
elements  in  the  composition  of  a  mandate;  ^/^V.^^,  the  labor  and 
Bervices  to  be  performed,  or  the  subject-matter  of  the  contract; 
second^  that  which  ie  to  be  done  must  be  gratuitous;  and,  third, 
the  mandatary  must  voluntarily  intend  to  do  that  which  he  prom- 
ises to  undertake.  It  must  be  something  ^o  be  done  in  the 
future,  and  have  respect  to  something  that  is  certain,  and  must 
be  of  such  a  character  that  it  may  be  considered  the  mandator's 
act,  although  done  by  the  mandatary,  and  it  must  be  something 
which  is  capable  of  being  done.  The  mandatary  has  no  prop- 
erty interest  in  the  thing,  except  that  lie  have  a  lien  for  any  ex- 
penses he  has  incurred.  But  the  possession  of  the  thing  gives 
him  the  right  to  bring  an  action  for  any  tort  or  wrong  done  by  a 
third  person. 

498.  Liability  of  Mandatary. — The  mandatary  is  respon- 
sible for  gross  negligence^  but  there  is  an  important  diiference 
between  his  liability  in  case  of  a  nonfeasance,  and  that  of  a  mis- 
feasance. A  nonfeasance  is  the  omitting  to  do  that  which  one 
promises  to  do  gratuitously.  If  the  undertaking  was  never  com- 
menced, there  would  be  no  liability,  because  there  was  nothing 
to  support,  the  promise.  But  if  one  promises  to  do  something 
gi  atuitousl  y,  and  really  begins  to  do  it^  and,  through  his  careless- 


BAILMENTS. 


193 


ness  or  neglect,  the  other  party  suffers  loss,  then  it  is  a  misfea- 
sance, and  he  is  liable  the  same  as  if  he  were  paid  for  his  ser- 
vices ;  as  where  one  undertakes  to  move  a  valuable  piece  of 
furniture  from  one  building  to  another,  and  by  his  carelessness  it 
is  destroyed,  he  would  be  liable.  He  must  bring  sufficient  skill 
to  his  undertaking  to  perform  his  duties  in  a  creditable  manner. 

499.  Terminating  the  Contract. — The  contract  of  man- 
date may  be  terminated  in  several  ways;  first,  by  the  death  of 
mandatary  if  no  part  of  the  mandate  is  executed;  if  it  is  partly 
executed  then  it  may  be  finished  by  his  relatives  or  executor; 
second,  by  the  death  of  the  mandator  when  it  is  w^holly  unfin- 
ished; third,  it  may  be  terminated  by  incapacity  of  the  manda- 
tary, as  by  insanity,  or  by  the  marriage  of  a  female.  It  may  also 
be  terminated  by  renunciation  of  the  agreement  by  the  manda- 
tary before  he  commenced  upon  it. 

500.  Loan  for  Use. — This  is  a  bailment  or  loan,  commonly 
called  borrowing,  of  an  article,  for  a  certain  length  of  time,  to 
be  used  by  the  person  who  borrows  it  without  paying  anything 
for  its  use.  If  it  were  paid  for  it  would  be  a  letting  to  hire,  a 
different  bailment  from  loan  for  use.  The  principal  object  of 
this  bailment  is  the  using  of  the  thing  lent  by  the  borrower. 
The  benefit  is  all  in  behalf  of  the  borrower.  The  borrower  is 
not  liable  for  any  loss  or  depreciation  which  results  from  the  use 
which  was  contemplated  by  the  parties  at  the  time  the  loan  was 
made. 

501.  Use  Restricted. — The  borrower  has  no  special  prop- 
erty in  the  thing  borrowed,  and  he  is  limited  in  its  use  to  the 
purpose  for  which  it  was  borrowed.  It  is  a  gratuitous  loan,  and 
the  use  is  understood  to  be  strictly  personal,  except  where  cir- 
cumstances at  the  time  of  the  borrowing  indicated  that  it  was 
to  be  used  by  a  different  person  or  for  a  different  purpose.  If  a 
horse  is  borrowed  to  be  rode  in  a  certain  direction,  the  borrower 
has  no  right  to  ride  it  in  the  opposite  direction,  or  if  borrowed 
to  drive  to  a  certain  place,  he  has  no  right  to  drive  to  a  more 
distant  place,  and  if  the  horse  is  injured,  even  without  his  fault, 
while  he  is  improperly  using  him,  he  will  be  liable  for  the  damage. 


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•lO^l.  Diligence  Required.— This  bailment  is  exclusively 
for  the  benefit  of  the  borrower,  and  therefore  he  must  exercise 
great  diligence  in  respect  to  the  thing  borrowed,  and  he  will  be 
held  responsible  for  slight  neglect.  But  when  the  lender  knows 
that  the  borrower  is  ignorant,  unskillful  and  incapable,  his  lia- 
bility will  be  limited  by  such  known  incapacity.  AVhere  the 
borrower  has  exercised  the  proper  diligence  he  will  not  be  liable 
for  losses  from  inevitable  accident,  or  such  as  he  could  not  pre- 
vent by  great  diligence.  But  he  must  be  able  to  show  that  he 
was  not  guilty  of  negligence. 

50:i.  Duty  of  Lender.—The  lender  must  not  interfere 
with  the  use  of  the  article  by  the  borrower  or  he  will  be  liable  for 
damages ;  and  if  he  know  of  any  defect  in  the  article  lent,  he  is 
under  obligation  to  make  it  known  to  the  borrower  ;  and  if  he 
fail  to  do  so,  and  the  borrower  is  injured  in  consequence  thereof, 
he  will  bo  liable  therefor.  Ordinary  expenses  incident  to  the 
thing  borrowed  must  be  borne  by  the  borrower,  such  as  feeding 
and  grooming  a  horse  ;  but  if  a  horse  get  siclr,  and  a  veterinary 
surgeon  has  to  be  employed,  the  lender  would  be  responsible. 

o04.  Pledge.— A  pledge  or  pawn  is  the  deposit  of  some 
article  of  personal  property  as  security  for  a  debt  or  some  obli- 
gation. A  pledge  is  distinguished  from  a  mortgage  in  only 
giving  a  special  property  in  the  pledge  during  the  holding  of  it, 
while  the  mortgage  gives  the  whole  legal  title  conditionally  to 
the  mortgagee.  The  right  of  the  pledgee  depends  entirely  upon 
retaining  possession  of  the  property  pledged.  A  pledge  must 
be  for  the  security  of  some  debt  or  engagement,  but  it  is  not 
essential  that  it  be  for  a  debt  of  the  pledgor,  it  may  be  for  the 
debt  of  any  person.  The  person  who  delivers  the  pledge  is 
called  the  pledgor,  and  the  person  who  receives  it  as  security  is 
called  the  pledgee.  It  is  essential  that  the  pledge  be  delivered 
to  the  pledgee  —  possession  is  necessary  to  the  consummation  of 
the  pledge  ;  therefore,  nothing  can  be  pledged  unless  it  can  be 
delivered;  but  the  delivery  need  not  always  be  actual,  a  construc- 
tive delivery  w411  sometimes  be  sufficient.  And  if  a  person  have 
limited  title  to  a  thing,  he  may  pledge  it  to  the  extent  of  his 
title. 


BAILMENl'S. 


195 


505.  Special  Property  in  Pledge.— The  pledgee  has  a 
special  property  in  the  pledge,  and  may  hold  the  exclusive  pos- 
session of  it  against  all  persons.  But  if  the  pledgee  voluntarily 
give  up  the  pledge,  he  cannot  again  re-possess  himself  of  it.  If, 
however,  it  be  wrongfully  taken  from  him,  either  by  the  owner 
or  another  person,  he  may  sue  for  and  recover  it.  He  may  also 
hold  the  pledge  for  all  incidental  expenses  resulting  from  the 
original  debt  for  which  it  was  pledged,  as  for  interest  or  neces- 
sary  expenses.  He  need  not  give  up  the  pledge  until  he  is  re-im- 
bursed  for  all  expenditures  which  properly  belong  to  the  debt. 
This  bailment  is  for  the  benefit  of  both  parties,  giving  time  to 
the  pledgor  and  security  to  the  pledgee. 

506.  Rights  of  Pledgee.— The  pledgee  has  the  right  to 
hold  the  property  as  security,  and  also  the  right  to  sell  it  after 
the  time  expires  for  which  it  w^as  given  ;  but  he  cannot  keep  the 
pledge  in  payment  of  the  debt,  nor  can  he  sell  it  until  the  time 
expires  and  the  pledgor  fails  to  redeem  it.  Where  no  time  is 
specified  for  the  payment  of  a  debt,  it  must  be  paid  within  a 
reasonable  time.  Where  the  use  of  the  pledge  would  be  bene- 
ficial to  it,  the  pledgee  has  the  right  to  use  it,  and  where  it  re- 
quires use  to  its  preservation,  it  is  the  duty  of  the  pledgee  to  use  it. 

50r.  Rights  of  Pledgor.— The  principal  right  of'  the 
pledgor  is  to  redeem  the  pledge  by  paying  the  debt.  This  right 
he  has  either  before  or  after  the  debt  is  due  so  long  as  the  pledgee 
keeps  possession  of  the  pledge,  and,  therefore,  if  the  pledgee 
fail  to  sell  the  pledge  after  default  of  payment  at  maturity,  it 
will  be  subject  to  the  pledgor's  right  to  redeem. 

508.  Termination  of  Pledge.— It  may  be  terminated  by 
payment  of  the  debt  by  the  pledgor;  or  by  taking  other  security 
instead  of  the  pledge;  or  by  the  debt  becoming  outlawed  by  the 
expiration  of  the  statute  of  limitations;  or  by  destruction  of  the 
pledge;  or  by  some  act  of  the  pledgee  which  amounts  to  a  release 
or  a  waiver  of  the  pledge. 

509.  Hiring,— This  is  a  bailment  in  which  some  personal 
chattel  is  let  out  for  use,  and  for  which  a  price  is  charged  for  its 


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use  ;  or  it  may  be  for  labor  or  services  about  the  chattel  In 
this  contract  there  are  two  parties,  \iz. :  Jirst,  the  owner  of  the 
goods  or  chattels,  which  are  let  for  use,  or  the  person  who  offers 
his  services  for  hire,  called  the  letter  to  hire  ;  secondy  the  party 
who  hires  the  chattel,  or  services  of  another,  called  the  hirer. 
The  hirer  pays  a  compensation  for  the  benefit  which  he  expects 
to  derive  from  the  use  of  the  chattel,  or  from  the  labor  or  ser- 
vices which  are  to  be  performed  for  him,  as  where  one  hires  a 
horse  and  carriage  to  drive  to  a  certain  place,  or  to  drive  for  a 
certain  length  of  time  and  pays  a  specified  price  for  it,  or  if  he 
hire  a  carpenter  to  do  a  piece  of  work  and  pay  him  by  the  hour 
or  day. 

510.  Duties  of  Letter  to  Hire.— The  letter  to  hire  must 
make  such  a  delivery  of  the  bailment  as  is  usual  and  customary, 
and  after  delivery  he  must  not  interfere  with  nor  obstruct  in  the 
use  of  it,  while  the  hirer  is  using  it  for  the  purpose,  and  in  the 
manner  which  was  intended  by  the  parties  at  the  time  it  was 
hired.  By  so  doing,  he  would  violate  his  implied  obligation,  and 
make  himself  liable  to  the  hirer.  So  long  as  the  hirer  is  using 
the  thing  for  the  purpose  agreed  upon,  the  other  party  has  no 
right  to  interfere  until  the  time  has  expired,  or  the  purpose  has 
been  accomplished  for  which  it  was  hired.  But,  if  the  hirer 
put  the  bailment  to  an  entirely  different  use  from  that  intended, 
then  the  letter  to  hire  may  peaceably  take  posvsession  of  the 
bailment,  but  he  cannot  use  force  in  order  to  get  possession.  lie 
may,  if  he  choose,  bring  an  action  for  trover,  which  is  an  action 
at  law  to  recover  the  value  of  the  bailment.  The  letter  to  hire 
is  bound  to  have  the  thing  in  suitable  order,  and  to  keep  it  in 
repair  during  its  use,  but  the  ordinary  expenses  during  the  use 
are  to  be  paid  by  the  liirer;  as  where  a  person  hires  a  horse  to 
drive  a  distance  of  one  hundred  miles  and  back,  it  is  his  duty  to 
pay  for  the  keeping  and  feeding  of  the  horse. 

513,    Duties  of  the  Hirer. — The  hirer  buys  the  use  of  the 

bailment  by  agreeing  to  pay  the  price,  and  has  a  property  inter- 
est in  it  which  gives  him  the  right  to  retain  possession  of  it,  and 
to  maintain  an  action  for  a  wrongful  dispossession  of  it,  during 
the  time  he  was  entitled  to  it.     He  must  exercise  ordinary  care 


and  diligence  over  it  while  in  his  possession,  as  he  will  be  liable 
for  losses  occasioned  by  his  own  negligence,  or  by  the  negli- 
gence of  those  acting  under  his  directions.  But  for  any  wilful 
or  malicious  acts  of  a  servant  he  will  not  be  liable.  Where,  for 
instance,  a  picture  is  hired,  if  a  servant  by  carelessness  injure  it, 
the  hirer  is  liable,  but  if  he  maliciously  cut  it  to  pieces,  the 
hirer  will  not  be  liable.  The  hirer  is  not  liable  for  the  acts  of 
other  servants  than  his  own,  or  those  acting  under  his  direc- 
tions; he  would  not  be  liable  for  the  acts  of  the  letter's  servants. 
He  must  use  the  bailment  with  due  diligence,  and  for  the  pur- 
pose for  which  it  was  hired,  and  must  return  it  at  the  proper 
time,  and  in  as  good  condition  as  when  he  received  it,  except 
the  ordinary  wear  caused  by  its  proper  use. 


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512.  Fire  Insurance.— This  is  a  contract,whereby  one  party- 
agrees,  for  a  consideration,  to  indemnify  another  against  risk  of 
loss  which  the  other  might  sustain  by  the  burning  of  his  houses, 
or  barns,  or  goods,  or  other  property  accidentally.  The  busi- 
ness of  insurance  is,  at  the  present  time,  almost  entirely  carried 
on  by  insurance  companies,  which  are  incorporated  under  a 
charter  granted  by  the  State,  which  enables  them  to  organize  as 
joint  stock  companies  under  certain  regulations  which  are 
required  for  the  safety  of  the  insured.  The  agreement  of  insur- 
ance is  generally  embodied  in  a  contract,  partly  printed  and 
partly  written,  called  2^  policy.  The  company  issuing  the  policy 
is  called  the  insurer.  The  word  imderwriter  is  strictly  applica- 
ble only  to  an  individual  insurer.  The  party  who  obtains  the 
insurance  is  called  the  insured. 

513.  Importance  of  Insurance. — Property  is  a  source  of 

power  and  enjoyment,  and  it  is  the  aim  of  every  prudent  business 
man  to  accumulate  wealth,  but  the  agents  of  destruction  are 
numerous,  and  none  is  more  to  be  feared  than  fire.  It  is  an 
ever-existing  and  perpetual  danger,  both  day  and  night,  and,  if 
the  business  man' could  get  no  relief  from  the  anxiety  it  would 
cause  him,  it  would  be  a  constant  wear  of  care  and  anxiety 
which  would  seriously  impair  his  business  energies.  But  the 
relief  is  found  by  throwing  all  the  risk  upon  the  insurance  com- 
panies by  means  of  the  contract  in  which  they  agree  to  indem- 
nify for  any  loss  that  the  owner  may  sustain.  The  insurers  have  so 
nearly  perfected  a  system  of  insurance  that  they  are  enabled  to 
make  these  contracts  of  indemnity  with  a  certainty  of  safety 
which  is  almost  without  exception. 

511.   Application  for  Insurance.— To  procure  insurance 
the  owner  must  make  an  application  to  the  company  or  its  agent, 

198 


and  this  should  generally  be  made  in  writing  and  be  signed  by 
the  applicant.  The  application  should  contain  an  accurate  de- 
scription of  the  property,  and  of  its  location  and  surroundings. 
A  knowledge  of  the  material  of  the  building,  whether  of  wood 
or  brick,  the  means  of  heating  and  lighting  it,  and  for  what 
purpose  it  is  used,  is  of  great  importance  to  the  insurers.  All 
questions  relating  to  the  property  which  are  asked  by  the  in- 
surers should  be  answered  truthfully  by  the  owner,  or  the  policy 
may  be  voidable  by  the  company.  If  the  application  is  satis- 
factory the  company  will  accept  the  risk  and  issue  a  policy. 

515.  The  Policy.— The  policy  is  the  contract  which  is 
made  by  the  insurers  and  given  to  the  owner  of  the  property,  by 
which  they  agree,  for  a  consideration  mentioned  therein,  to  be 
paid  by  the  insured,  and  which  is  called  the  premium,  to  pay 
the  owner  the  amount  of  loss  he  sustains  by  fire,  provided  it 
does  not  exceed  the  amount  insured  which  is  mentioned  in  the 
policy.  For  instance,  the  owner  may  obtain  an  insurance  on  his 
house  for  one  year  to  the  amount  of  five  thousand  dollars,  for 
which  he  pays  a  premium  of  ten  dollars.  This  premium  is  to  be 
paid  in  any  event,  whether  there  be  any  loss  or  not,  and  if  there 
be  no  loss  it  is  so  much  gain  to  the  insurers,  but  if  the  house  is 
destroyed  by  fire  within  the  year,  the  insurance  company  must 
pay  the  owner  the  full  amount  insured,  five  thousand  dollars,  if 
that  be  the  valuation  agreed  upon  between  the  parties.  What- 
ever is  insured,  whether  it  be  a  house  or  any  kind  of  personal 
property,  it  must  be  distinctly  mentioned  in  the  policy,  and,  as 
a  general  rule,  the  insurance  is  limited  to  that  which  is  so  men- 
tioned. The  policy  is  a  printed  form  with  blank  spaces  to  be 
filled  in  with  the  matter  pertaining  to  the  insurance,  such  as  the 
description,  etc. 

516.  The  Time.— The  time  for  which  the  policy  is 'made 
is  generally  one  year,  but  it  may  be  made  for  any  reasonable 
length  of  time,  and  is  frequently  made  for  two  or  three  years. 
The  beginning  and  the  ending  of  the  time  must  be  stated  with 
the  strictest  precision,  and,  therefore,  is  generally  stated  to 
begin  at  twelve  o'clock  at  noon  of  a  certain  day,  and  to  end  at 
the  same  time  on  another  certain  day.     When  the  time  expires, 


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if  the  parties  wish  the  insurance  to  continue,  it  is  generally  done 
by  making  out  a  ticket  of  renewal,  which  contains  the  name  of 
the  insured,  the  amount  of  premium  to  be  paid,  and  the  amount 
of  insurance  to  be  continued,  wnth  the  number  of  the  policy, 
and  is  signed  by  the  agent.  This  saves  the  trouble  of  making 
out  a  new  policy,  and  has  just  the  same  effect. 

•517.  The  Prominm. — The  amount  which  is  charged  by  the 
insurance  company  for  taking  the  risk,  is  called  the  pretnium, 
and  is  generally  paid  in  advance,  but  the  time  of  its  payment 
may  be  a  matter  of  agreement  between  the  parties.  If  the 
policy  specifies  that  the  insurance  shall  not  commence  until  the 
premium  is  paid,  then  there  can  be  no  claim  for  loss  against  the 
company,  unless  the  premium  be  paid. 

518.  Insurable  Interest.— To  prevent  fraud,  it  is  import- 
ant that  the  insurer  ascertain  the  amount  of  interest  the  appli- 
cant has  in  the  property  to  be  insured,  and  to  prevent  parties 
from  receiving  more  than  they  are  entitled  to,  a  clause  is 
generally  inserted  in  the  policy  limiting  the  amount  of  liability 
to  the  "  extent  of  his  interest."  The  greater  the  extent  of  inter- 
est in  the  property  which  remains  uninsured,  the  more,  as  a 
general  rule,  will  the  owner  exert  himself  to  prevent  loss.  Any 
one  may  insure  his  own  property,  and  so  he  may  insu  any 
property  in  which  he  has  a  valuable  interest:  a  mortgagee  may 
insure  the  property  on  which  the  mortgage  is  placed. 

519.  Conditions. — Insurance  policies  are  full  of  conditions, 
which  are  made  part  of  the  contract.  The  following  quotations 
will  serve  as  illustrations:  "If  an  application,  survey,  plan  or 
description  of  the  property  herein  insured,  is  referred  to  in  this 
policy,  such  application,  survey,  plan  or  description  shall  be 
considered  a  part  of  this  contract,  and  a  warranty  by  the 
assured,"  and,  "  If  the  interest  of  the  assured  in  the  property 
be  any  other  than  the  entire,  unconditional  and  sole  ownership 
of  the  property,  for  the  use  and  benefit  of  the  assured,  or  if 
the  building  insured  stands  on  leased  ground,  it  must  be  so 
represented  to  the  company,  and  so  expressed  in  the  written 
part  of  the  policy,  otherwise  the  policy  shall  be  void."     These 


conditions,  which  are  very  important  points  in  the  policy,  are 
usually  in  very  fine  print,  and  we  opine  but  few  persons  read 
them  carefully  enough  to  know  what  they  are.  Another  condi- 
tion very  generally  inserted  in  policies  is,  that  the  company  shall 
have  the  right  to  elect  whether  to  repair  the  house  in  case  of 
damage,  or  to  pay  a  certain  sum  of  money.  So,  also,  it  is  gen- 
erally conditioned  that  no  material  change  shall  be  made  in  the 
building  without  consent  of  the  company  ;  that  no  additions 
shall  be  made,  etc. 

520.  Valued  and  Open  Policies. — There  are  two  kinds  of 

insurance  policies.  Where  a  fixed  value  is  put  upon  the  prop- 
erty by  agreement  between  the  parties  at  the  time  the  insurance 
contract  is  made,  and  the  value  is  inserted  in  the  policy,  as  the 
insurance  of  one  hundred  barrels  of  flour  at  six  dollars  per 
barrel,  it  is  called  a  valued  policy,  and  the  sum  expressed  in  th3 
policy  is  binding  in  case  of  loss.  But  generally  the  policy 
provides  that  the  insurers  shall  make  good  the  loss  or  damage 
to  be  estimated  according  to  the  true  and  actual  value  of  the 
property  at  the  time  the  loss  happens:  this  is  called  an  opeii 
policy. 

591.  Amount  Insured. — The  parties  may  agree  upon  any 
amount  they  may  see  fit,  but  generally  buildings  are  not  insured 
for  what  is  considered  their  full  value.  One  reason  for  this  is, 
that  it  might  be  an  inducement  to  the  owner  to  have  the  prop- 
erty destroyed  in  order  to  get  the  insurance.  Most  companies 
limit  the  amount  of  risk  they  will  take  on  any  one  building  or 
block  of  buildings  to  five  or  ten  thousand  dollars,  so  that  the 
owners  of  large  and  valuable  buildings  and  blocks  are  sometimes 
obliged  to  obtain  insurance  in  a  large  number  of  companies  in 
order  to  secure  a  sufticient  amount  of  security.  The  amount 
expressed  in  the  policy  or  policies  is  the  extreme  amount  which 
can  be  collected  in  any  case,  even  if  the  loss  should  double  or 
quadruple  that  amount,  and  where  the  loss  is  less  than  the 
amount  insured  only  the  actual  loss  can  be  recovered.  In  case 
of  loss  where  the  property  is  insured  in  several  companies,  if 
the  loss  is  less  than  the  amount  insured,  each  company  pays  its 
proportion  of  the  actual  loss  in  proportion  as  the  amount  insured 


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COMMERCIAL    LAW    AND    BUSINESS    FOEMS. 


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in  each  is  to  the  whole  amount  insured,  but  in  no  case  does  the 
insured  get  more  than  the  actual  loss. 

i'52a.  Joint  Stock  Companies.— To  carry  on  the  insurance 
business  successfully  requires  large  amounts  of  money,  and  for 
that  reason  it*is  almost  universally  carried  on  by  incorporated 
stock  companies.  Each  of  the  stockholders  becomes  such  by 
subscribing  and  paying  for  so  many  shares  of  the  capital  stock, 
which  is  represented  by  stock  certificates.  The  capital  is  secured 
by  the  sale  of  these  certificates. 

5*23.  Settlement  of  Losses.— The  following  clause  will 
show  what  is  to  be  done  in  case  of  loss:  "The  amount  of  loss 
or  damage  to  be  estimated  according  to  the  actual  cash  value  of 
the  property  at  the  time  of  the  loss,  and  to  be  paid  sixty  days 
after  due  notice  and  satisfactory  proofs  of  the  same  shall  have 
been  made  by  the  insured,  and  received  at  this  office,  in  accord- 
ance with  the  terms  and  provisions  of  the  policy,  unless  the 
property  be  replaced,  or  the  company  have  given  notice  of  their 
intention  to  rebuild  or  repair  the  damaged  premises." 


PiEFLECTIONS  AND  SUGGESTIONS. 


After  the  traveler  has  made  his  first  tour  through  an  unfa- 
miliar land  it  is  well  for  him  to  reflect  upon  what  he  has  been 
over  and  what  he  has  seen,  and  to  ascertain  if  he  has  gleaned 
from  it  all  that  he  might  have  done,  or  all  that  could  be  of  value 
to  him.  It  not  infrequently  happens  that  careful  reflection  re- 
sults in  the  conviction  that  many  points  of  interest,  and  perhaps 
some  of  the  most  importance,  escaped  observation,  or  were  but 
casually  noticed.  Presuming  that  the  matter  presented  in  the 
foregoing  pages  will  have  been  most  frequently  traversed  by 
young  men  who  are  soon  to  begin  business  life,  we  ask  that,  be- 
fore laying  aside  this  book,  they  will  seriously  reflect  upon  the 
matters  passed  over,  and  settle  the  question  whether,  from  the 
topics  presented,  all  has  been  gathered  which  should  have  been,  or 
which  might  be,  of  value  in  business  life.  If  the  conclusion  is 
reached  that  everything  of  importance  has  been  thoroughly 
mastered,  then  we  have  only  words  of  congratulation  and  com- 
mendation, and  will  not  ask  further  investigation.  But  should 
the  conviction,  after  careful  reflection,  be  that  much  of  import- 
ance escaped  notice,  and  valuable  points  were  but  imperfectly 
understood,  then  we  ask,  as  a  matter  of  duty  to  themselves,  and 
as  a  favor  to  their  instructors,  that  they  retrace  their  course  and 
gather  up  all  that  was  too  hastily  and  carelessly  passed.  It 
would  be  well,  too,  for  young  men  to  reflect  upon  the  necessity 
of  law,  and  its  cause.  If  all  men  were  perfect,  there  would  be 
little  need  of  law ;  if  all  men  were  disposed  to  deal  justly, 
there  would  be  less  need  of  courts  and  lawyers;  but,  unfortu- 
nately, selfishness  enters  largely  into  the  composition  of  most 
men,  and  many  are  unwilling  to  get  an  honest  living  by  honest 
work.  It  therefore  becomes  necessary  to  protect  the  honest 
and  punish  the  transgressor.  Law  consists  of  a  code  of  princi- 
ples and  rules,  based  upon  right  and  justice,  the  elements  of 
which  are  all  contained  in  the  Ten  Commandments.     The  duties 

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COMMERCIAL    LAW    AND    BUSINESS   FORMS. 


of  men  are  so  well  defined  in  these  commandments  as  to  render 
little  other  law  necessary  if  their  precepts  were  conscientiously 
regarde<l.  The  moral  law  takes  cognizance  not  only  of  the  acts 
of  men,  but  also  of  their  thoughts  and  intentions,  while  the 
common  law  is  confined  almost  entirely  to  their  acts  — that  is,  to 
what  they  do,  instead  of  that  which  they  intend  to  do  —  and  thus 
it  is  in  accordance  with  the  latter  standard  that  each  individual  is 
usually  judged  by  the  community  in  which  he  lives.  This  brings 
us  to  the  consideration  of  the  value  of  a  good  character. 

Character  is  a  distinctive  quality  either  for  good  or  for  evil. 
A  good  character  is  the  richest  boon  a  man  can  possess,  either 
in  a  moral  or  a  business  sense,  since  it  is  impossible  to  have  a 
good  character  without  being  an  estimable  man,  and  the  confidence 
which  is  established  in  a  business  man  by  a  good  character  is 
the  most  valuable  capital  he  can  have.  Every  young  man  has 
it  in  his  own  power  to  establish  for  himself  just  such  a  char- 
acter as  he  may  desire.  It  is  a  thing  of  his  own  making,  and 
when  once  thoroughly  established  it  will  bear  fruit  either  for 
good  or  evil.  Everywhere,  the  world  over,  the  man  who  stands 
firmly  for  principle,  against  every  allurement  and  all  opposition, 
will  secure  the  confidence  of  his  fellow-men  and  the  admiration 
of  all  who  know  him. 

There  can  be  no  grander  spectacle  than  to  see  a  man  sacrifice 
everything  for  principle.  A  noble  character  not  only  permeates 
the  community  which  surrounds  it,  but  its  influence  often 
reaches  beyond  the  limits  of  its  own  country,  and  is  felt  on 
distant  continents,  inspiring  and  elevating  multitudes  of  people. 
The  memories  of  the  great  and  good  men  who  lived  in  ages  that 
have  passed  are  still  kept  fresh  in  the  minds  and  hearts  of  the 
people,  and  cherished  as  examples  worthy  of  emulation.  The 
old  and  familiar  adage  that  "  honesty  is  the  best  policy  "  must 
have  originated  from  the  world's  experience  with  the  ever- 
existing  conflict  of  right  against  wrong,  which  must  finally  and 
inevitably  terminate  in  the  triumph  of  the  right.  It  is  a  truth- 
ful saying,  which  will  be  as  forcible  in  ages  to  come  as  it  is  now 
or  has  been  in  past  ages.  Of  the  business  man  with  reference  to 
whom  it  can  truly  be  said  "his  word  is  as  good  as  his  bond  " 
very  seldom  will  a  bond  be  required  ;  his  character  for  sterling 
honesty  will  establish  for  him  a  credit  for  anything  he  may  need. 


REFLECTIONS    AND    SUGGESTIONS. 


205 


There  is  nothing  more  valuable  to  a  business  man  or  a  busi- 
ness house  than  a  well-established  confidence,  resulting  from 
strict  integrity  and  honest  dealing.  Every  man  has  a  char- 
,acter  of  some  kind,  either  good  or  bad,  and  sooner  or  later  his 
true  character  will  be  known ;  often  it  is  known  to  the  world 
when  he  little  suspects  it.  The  mercantile  agencies  can  give 
the  commercial  standing  of  almost  any  man  doing  business  in 
any  part  of  the  country,  while  many  of  these  persons  may  not 
be  aware  that  they  are  known  beyond  the  circle  of  their  own 
acquaintance. 

Character  is  made  up  of  the  little  things  of  every-day  life, 
which  taken  separately  might  seem  unimportant,  but  when  woven 
together  make  a  complete  record.  Therefore,  it  is,  that  every 
person  may  mould  his  character  according  to  his  own  design  ; 
he  may  build  as  he  will,  since  he  furnishes  all  the  material  out 
of  which  his  character  is  formed.  He  who  builds  well  in  this 
respect  has  a  richer  endowment  than  money  and  goods,  and  a 
more  valuable  inheritance  to  leave  to  the  world. 

The  young  man  who  is  about  to  engage  in  business  should 
consider  carefully  what  is  necessary  to  success.  President  Gar- 
field said:  "Men  succeed  because  they  deserve  success.  Their 
results  are  wrought  out,  they  do  not  come  to  hand  ready-made; 
poets  may  be  born,  but  success  is  made."  First  of  all  it  should 
be  understood  that  all  true  and  permanent  success  is  based  upon 
genuine  character,  without  which  no  success  is  worth  having. 
No  person  can  afford  to  do  anything  which  will  tarnish  his 
character.  Wealth  obtained  at  the  sacrifice  of  character  will 
never  prove  a  blessing.  Many  a  young  man  with  brilliant 
prospects  has  been  ruined  by  his  haste  to  get  rich  Emerson 
says:  "Man  was  born  to  be  rich,  and  inevitably  grows  rich  by 
the  use  of  his  faculties.^'  Certainly  no  country  in  the  world 
furnishes  better  opportunities  for  securing  wealth  than  our  own, 
and  especially  is  there  none  where  a  poor  boy  can  so  easily  se- 
cure a  fortune  and  an  honorable  position  as  in  the  United  States, 
"the  land  of  the  free  and  the  home  of  the  brave."  Most  of  the 
wealthy  men  of  to-day  commenced  their  business  life  poor,  and 
have  won  their  own  way  to  wealth  and  position  by  their  own 
efforts.  There  is  no  discipline  which  proves  of  so  much  value 
to  young  men  as  being  thrown  upon  their  own  resources.     If 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


they  have  anything  in  them  which  entitles  them  to  success,  they 
will  be  sure  to  succeed. 

But  success  will  not  come  of  its  own  accord;  there  must  be 
diligent  application  and  persevering  effort  to  bring  about  grand 
results.  Intelligent  effort  and  diligent  application  will  almost 
invariably  make  any  honorable  business  successful.  Success  is 
an  intellectual  accomplishment;  the  more  knowledge  is  brought 
into  any  undertaking  the  more  certain  it  is  to  be  a  success.  It 
is  a  safer  rule  to  concentrate  one's  powers  on  a  single  enterprise 
than  to  be  engaged  in  many.  To  the  young  men  of  the  present 
age  the  accumulated  experience  of  shrewd  business  men  is  an 
invaluable  inheritance,  by  which  they  may  profit  if  they  will. 
This  experience  goes  to  show  that  there  is  always  a  reason  in 
the  man  for  his  good  or  bad  fortune. 

Neither  honor  nor  wealth  come  to  men  by  luck,  they  must 
both  be  earned  before  they  can  be  enjoyed,  and  neither  can  be 
earned  in  a  day;  it  is  only  by  persevering  effort  and  indomita- 
ble determination  that  most  men  reach  the  acme  of  their  ambi- 
tion. Every  young  man  has  within  him  forces  and  capabilities 
which  will  enable  him  to  work  out  for  himself  honorable  posi- 
tion and  acquire  an  ample  fortune;  but  idleness  will  never  pro- 
duce wealth,  nor  will  immorality  bring  honor.  Property  is 
wasted  by  the  idle  and  imbecile,  and  is  accumulated  by  the  in- 
dustrious, brave  and  persevering.  This  rule  is  as  imperative  as  if 
it  were  governed  by  the  principle  of  chemical  repulsion  and 
attraction.  Therefore,  since  every  young  man  has  the  requisite 
forces  and  capabilities  within  himself  to  secure  the  highest 
possibilities,  it  only  remains  for  him  to  put  these  forces  in  mo- 
tion, and  patiently  and  diligently  guide  and  protect  them,  and 
they  will  surely  bring  a  generous  reward.  The  cultivation  of 
the  intellectual  faculties  not  only  affords  one  the  greatest  pure 
enjoyment,  but  these  faculties  when  well  disciplined  become 
the  controlling  forces  in  the  acquisition  of  wealth,  and  when 
guided  by  moral  sentiment  they  become  the  sources  of  all  the 
noble  qualities  which  bring  honor  and  fame.  Do  not  abuse  or 
neglect  the  precious  faculties  that  have  been  given  you.  Cherish 
and  cultivate  them.  Determine  to  reach  the  highest  plane  of 
mtellectual  culture,  by  systematic,  diligent  and  persevering  study, 
and  you  will  not  fail  of  success.  J.  C.   BRYANT. 


APPENDIX. 


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"IV;" 


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QUESTIONS  FOR  REVIEW. 


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CONTRACTS. 

1.  What  is  a  simple  contract? 

2.  What  are  the  primary  elements  of  a  contract  ? 

3.  What  is  the  agreement,  and  what  are  its  elements  ?  Mention 
the  primary  and  secondary  elements  of  a  contract. 

4.  What  number  of  persons  is  required  to  make  a  contract  ? 

5.  What  ability  is  required?  How  are  persons  classified? 
What  are  corporations  and  States  called?  What  kind  of  con- 
tracts may  corporations  make?  What  may  States  and  their 
agents  do?  Are  contracts  made  by  minors  binding?  When 
may  contracts  of  marriage  be  made,  and  what  are  they  regu- 
lated by  ? 

6.  What  is  another  necessary  element  of  a  contract  ?  What 
kind  of  assent  must  it  be  ?     How  may  it  be  indicated  ? 

7.  What  is  the  first  step  towards  making  a  contract  ?  What 
is  a  proposition  ?  When  may  it  be  withdrawn  ?  What  makes  a 
proposition  binding  ?  What  may  custom  do  ?  How  may  a 
proposition  for  the  return  of  stolen  articles  be  accepted  ?  How 
long  is  such  an  ofi^er  binding  ? 

8.  What  is  meant  by  giving  an  option  or  refusal  ?  When 
must  the  acceptance  be  to  make  it  binding  ?  Can  the  party 
giving  the  option  retract  it  ?  When  and  why  ?  How  must  the 
acceptance  be  ?     What  illustrations  are  given  ? 

9.  What  are  sales  on  trial  ?  In  effect,  what  does  the  buyer 
say  ?  When  cannot  the  seller  withdraw  his  offer  ?  What  right 
has  the  buyer  ? 

10.  When,  and  how,  may  revocation  of  option  be  made? 
What  effect  does  the  death  of  the  party  making  the  offer  have, 
and  when  ?     How  otherwise  can  an  option  be  revoked  ? 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


11.  When  may  a  proposition  made  by  letter  be  accepted? 
When  may  it  be  withdrawn?  What  illustration?  When  an 
order  for  goods  has  been  received,  and  the  goods  placed  in  the 
hands  of  a  carrier,  can  the  order  be  withdrawn  ? 

12.  How  must  a  proposition  be  accepted  ?  When  does  an  ac- 
ceptance sent  by  letter  take  effect  ?  Can  an  acceptance  be  re- 
voked ?     How  may  the  acceptance  be  ? 

13.  What  is  express  assent  ?     Is  it  affected  by  custom  ? 

14.  What  is  implied  assent?  Is  it  affected  bv  custom  and 
usage  ?  What  implied  assent  is  there  when  a  draft  is  accepted 
for  honor?     What  illustration  of  co-sureties? 

15.  What  is  the  rule  in  case  of  mistake  of  law?  What  is 
every  man  presumed  to  know  ?  What  kind  of  contracts  does  it 
apply  to  ? 

16.  What  does  refusal  of  proposition  do?  Has  any  person  a 
right  to  accept  a  proposition  except  the  person  to  whom  it  is 
made  ?     AVhat  illustration  ? 

17.  W^hat  parties  are  bound  by  a  contract  ?  Can  other  par- 
ties sometimes  be  substituted  ?     What  illustrations  ? 

18.  What  effect  does  mistake  of  fact  sometimes  have  upon  a 
contract  ?  What  does  Justice  Story  say  about  mistake  of  fact  ? 
What  does  a  palpable  mistake  entitle  a  person  to?  What  illus- 
tration ? 

19.  What  is  the  consideration?  What  may  it  be?  Must  it 
always  be  expressed  ? 

20.  What  is  a  valuable  consideration  ?  What  may  parties  do 
about  consideration  ? 

21.  What  is  a  good  consideration  ?    What  will  it  not  support  ? 

22.  What  is  sufficiency  of  consideration  ?  Must  the  promise 
and  consideration  be  equivalent  ?  What  should  it  have  ?  How 
can  a  person  make  himself  liable  without  consideration  ? 

23.  What  effect  will  forbearance  sometimes  have?  What 
illustrations  ?  How  may  forbearance  be  sufficient  to  support  a 
promise  ? 

24.  When  will  mutual  promises  support  each  other  ?  What 
does  the  liability  arise  from  ?     What  illustration  ? 

25.  A  moral  obligation  is  sufficient  for  what?  What  illustra- 
tions ? 


QUESTIONS    FOR   REVIEW.  3 

26.  What  is  the  statute  of  frauds  ?  Does  it  apply  to  original 
promises  ?  What  kind  of  undertakings  are  affected  by  it  ?  What 
illustrations  are  given  ?     What  application  does  it  have  to  sales  ? 

27.  What  must  the, thing  to  be  done  be?  On  account  of 
what  may  contracts  be  void  ? 

28.  What  is  fraud?  What  if  a  contract  be  tainted  by  fraud? 
By  whom  are  such  contracts  voidable  ?  When  must  it  be 
avoided,  if  at  all?  Can  the  party  perpetrating  a  fraud  take 
advantage  of  it  ? 

29.  Is  a  contract  valid  which  binds  a  person  not  to  do  any 
business  ?  Why  not  ?  What  illustration  ?  Is  a  contract  foj;  a 
partial  restraint  of  trade  valid  ? 

30.  What  causes  will  render  contracts  void  ? 

31.  What  do  contracts  derive  their  force  from  ?  To  under- 
stand a  contract  what  is  it  necessary  to  get  at  ?  How  is  this 
done  ?  How  are  commercial  contracts  construed  ?  What  will 
the  law  do  if  the  terms  of  a  contract  are  ambiguous  ?  What 
will  usage  and  custom  sometimes  do  ? 

32.  What  will  violation  of  essential  requisites  or  omission  of 
necessary  elements  of  a  contract  do?  What  defenses  may 
sometimes  be  set  up  ? 

33.  Who  is  the  person  to  perform  in  a  contract  ?  What  illus- 
tration is  given  ?  What  is  necessary  when  plea  of  tender  is 
made  if  suit  be  commenced  ?  How  must  performance  be  done  ? 
When  will  it  discharge  the  contract  ? 

34.  How  is  every  contract  to  be  performed  ?  What  are  to  be 
inferred  from  the  terms  of  the  contract?  How  must  express 
stipulations  be  performed  ? 

35.  When  is  time  an  important  element  in  a  contract? 
What  must  a  party  do  if  he  choose  to  deviate  from  a  fixed  time  ? 
What  does  a  month  mean  in  simple  contracts  ?  What  does  it 
mean  in  negotiable  paper?     What  does  a  day  mean  at  a  bank? 

36.  Where  something  is  to  be  done  at  a  particular  place,  what 
must  the  person  to  perform  do  ?  What  must  be  done  if  money 
is  to  be  paid  at  a  bank  ?  What  is  the  rule  where  no  place  is 
mentioned  ? 

37.  What  if  the  thing  promised  is  impossible  of  performance 
or  illegal  in  character  ?     What  if  impossible  for  promisor  but 


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4  COMMEKCIAL    LAW    ASD    BUSINESS    FORMS. 

not  for  another  ?     What  will  excuse  non-performance  ?     Where 
one  party  violates  a  contract,  what  may  the  other  do  ? 

38.  How  must  payment  be  to  be  legal  ?  IIow  must  it  gener- 
ally be  made  ?  If  other  property  is  accepted,  what  affect  Avill  il 
have  ?    When  will  part  payment  cancel  a  debt  ? 

39.  If  the  debtor  give  his  o>\ti  note  or  bill  of  exchange,  what 
effect  does  it  have  upon  the  debt  ?  What  must  the  party  hold- 
ing such  paper  do  when  it  becomes  due?  If  paper  is  taken  as 
payment  and  dishonored,  how  is  the  debt  affected  ? 

40.  If  a  note  of  a  third  person  is  received  by  the  creditor  of 
his  own  choice,  how  will  it  be  considered  ?  What  if  the  debtor 
indorsed  the  note  and  it  is  not  paid  ?  IIow  if  the  creditor 
received  the  paper  as  security  and  it  is  not  paid  ? 

41.  Is  a  receipt  proof  of  payment?  How  may  it  be  set  aside  ? 
What  exception  is  it  to  the  general  rule  ? 

42.  What  is  accord  ?  What  effect  does  accord  without  satis- 
faction have  upon  a  contract?  What  may  the  parties  do  with- 
out its  operating  as  a  defense  ? 

43.  What  is  arbitrament?  IIow  can  parties  submit  their  dif- 
ferences to  arbitration  ?  Where  an  award  has  been  made,  what 
can  be  done  ? 

44.  What  effect  does  pendency  of  another  action  have? 
What  is  a  good  defense  to  a  suit  brought  for  the  same  cause  ? 

45.  What  is  a  release?  Is  any  particular  form  of  words 
necessary  ?  IIow  may  it  be  made  ?  IIow  may  verbal  contracts 
be  released  ?  What  do  written  contracts  require  ?  What  may 
a  release  be  for  ?  What  effect  does  a  release  of  the  principal  of 
a  debt  have  ?  What  effect  tlie  release  of  one  of  several  joint 
debtors  ?  IIow  when  given  to  one  of  several  joint  creditors  ? 
In  how  many  ways  may  a  releasee  result  from  operation  of  law  ? 

46.  What  is  a  tender  ?  What  is  the  effect  of  a  legal  tender 
before  suit  is  commenced?  As  soon  as  suit  is  commenced,  what 
must  be  done  to  make  the  tender  good  ?  By  whom  may  a  ten- 
der be  made?  What  amount  must  it  be?  May  it  be  condi- 
tional ?  What  must  it  be  made  in  ?  Are  national  bank  bills  a 
leml  tender  ? 

47.  How  may  common  law  be  changed  ?  What  are  the  laws 
enacted   by   the   legislatures   of    the   States   called?     Are    the 


QUESTIONS    FOR    REVIEW. 


5 


statute  laws  of  the  States  uniform?  What  effect  has  the 
atatute  of  limitations  ?  May  a  person  waive  the  right  to  plead 
it  as  a  defense  ?  How  many  years  does  it  usually  run  ?  What 
does  it  do  to  the  debt  ?  When  does  it  begin  to  run  ?  When,  on 
a  note  payable  on  demand  ?  When,  on  a  conditional  promise  ? 
IIow  affected  by  the  absence  of  debtor  from  the  State  ?  What 
will  renew  a  debt  after  it  is  outlawed  ?  What  is  the  effect  of  a 
payment  ?     What  if  made  by  one  of  the  joint  makers  ? 

48.  What  is  a  set-off  ?  How  was  this  defense  created  ?  IIow 
must  a  debt  be,  to  be  used  as  a  set-off  ?  Can  a  debt,  due  from 
one  of  the  partners,  be  set-off  against  a  debt  owing  to  the  part- 
nership ?  If  a  person  is  sued  as  administrator,  can  he  ai)ply  a 
debt  due  to  himself  as  a  set-off  ? 

49.  What  is  recoupment,  and  how  did  it  originate  ?  What  is 
the  illustration  ? 

50.  What  is  the  subject-matter  of  business  form  No.  1  ? 
What  does  the  party  of  the  second  part  agree  to  do  ?  How  and 
when  does  he  agree  to  do  it  ?  What  does  the  party  of  the  first 
part  agree  to  do  ?     How  do  they  bind  themselves  ? 

51.  What  is  the  contract  embraced  in  form  No.  2  ?  What  is 
the  express  condition  ?  What  does  the  party  of  the  first  part 
agree  to  do  ?  What  if  the  payments  are  not  made  as  specified  ? 
Why  is  a  seal  necessary  ? 

52.  What  is  the  contract  under  form  No.  3  ?  What  does  the 
party  of  the  first  part  agree  to  do?  What  the  party  of  the 
second  part  ?     What  condition  is  inserted  ? 

53.  What  is  the  subject-matter  of  business  form  No.  4  ?  What 
does  the  first  party  agree  to  do  ?  When  does  the  second  party 
agree  to  pay  ? 

54.  What  does  the  party  of  the  first  part  agree  to  do  in  busi- 
ness form  No.  5  ?  How  does  the  second  party  agree  to  pay  ? 
What  security  is  to  be  given  ?     Hoav  is  the  title  to  be  conveyed  ? 

NEGOTIABLE   PAPER 

55.  What  does  the  term  negotiable  paper  embrace  ?  What 
is  the  promissory  note  ?  What  are  bills  of  exchange  used  for  ? 
What  should  every  person  be  familiar  with  ? 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


66.  What  did  the  needs  of  commerce  give  rise  to?  "What 
preceded  the  use  of  money?  What  did  commerce  require  to 
facilitate  trade?  At  what  early  period  was  negotiable  paper 
probably  used  ? 

57.  What  is  the  peculiarity  of  negotiable  paper?  IIow  can  it 
be  transferred  ?  What  particular  words  are  generally  used  to 
make  it  transferable  ?  If  order  and  bearer  are  both  omitted  in 
the  body  of  negotiable  paper,  what  effect  does  it  have  ?  What 
does  the  statute  laws  of  some  States  require?  Mention  some  of 
the  requirements. 

58.  What  constitutes  negotiable  paper?  Is  any  particular 
form  of  words  necessary  ?  What  has  been  held  sufficient  ? 
What  must  the  promise  be  for?  How  must  the  amount  be? 
May  there  be  any  contingencies  ?  Is  a  promise  to  pay  on  the 
arrival  of  a  boat  sufficient  ?  IIow  if  it  be  payable  after  the  death 
of  a  person  ? 

59.  What  is  a  negotiable  promissory  note?  What  does  its 
value  and  importance  depend  chiefly  upon  ?  Give  illustrations 
of  how  notes  may  be  made  negotiable.  How  might  notes  be 
written  ?     How  should  thov  be  written  ? 

60.  To  whom  is  the  maker  of  a  note  or  the  acceptor  of  a 
draft  first  liable?  To  whom  may  they  be  liable  afterwards? 
What  are  the  two  classes  of  persons  called  ?  May  the  liability 
of  the  maker  sometimes  be  s^^reater  to  one  holder  than  it  miffht 
have  been  to  another?     What  is  the  explanation  for  this? 

61.  What  does  the  law  sometimes  give  subsequent  parties? 
What  is  the  note  in  the  hands  of  the  payee  ?  Why  may  one 
person  collect  a  note  when  another  could  not  ?  What  is  a  per- 
son supposed  not  to  know  if  he  take  a  note  before  maturity  ? 
May  an  innocent  holder  transfer  and  give  a  good  title  ? 

62.  How  must  a  subsequent  party  receive  paper  to  get  a  good 
title  ?  May  accommodation  paper  be  taken  with  knowledge  and 
yet  be  good  ?  Will  receiving  paper  before  maturity  remedy  all 
defects  ?     What  kind  of  defects  are  overcome  by  transfer  ? 

63.  Is  negotiable  paper  ever  transferred  after  maturity? 
Does  it  have  the  same  effect  as  if  transferred  before?  What  if 
it  remain  in  the  hands  of  the  original  payee  until  maturity? 
W^hat  then  happens  to  it  ? 


QUESTIONS    FOR    REVIEW.  7 

64.  How  many  w^ays  are  there  generally  of  transferring  ?  If 
payable  to  order  what  must  be  done  ?  When  payable  to  bearer 
how  may  it  be  transferred  ?  May  a  payee  indorse  a  bill  if  pay- 
able to  bearer  ?     What  will  be  the  effect  ? 

65.  Why  is  the  date  an  important  part  of  a  note  or  draft  ? 
In  computing  time,  is  the  day  of  date  counted  ?  If  the  date  is 
omitted  is  the  paper  void  ?  What  must  the  holder  do  in  such 
case?     What  does  date  mean? 

06,  How  must  the  time  be  in  negotiable  paper  ?  At  what 
time  may  paper  be  payable  ?  If  no  time  is  specified,  when  is  it 
payable  ? 

67.  What  is  important  about  person  in  negotiable  paper? 
Where  should  the  name  of  the  person  to  whom  it  is  payable  ap- 
pear? What  other  name  should  appear  in  the  note?  What 
must  the  maker  be  competent  to  do?  How  may  persons 
be  incompetent  to  make  negotiable  paper?  What  has  legis- 
lation done  in  some  States?  Can  an  unmarried  woman  make 
contracts  ? 

68.  IIow  should  the  amount  be  specified,  and  how  expressed  ? 
Where  there  is  a  discrepancy  in  the  amoimt  expressed  by  words 
and  figures,  which  governs  ?  What  example  as  to  ambiguous 
words  ? 

69.  Is  a  contract  good  without  a  consideration?  What  is  a 
promissory  note?  May  a  note  which  was  given  without  con- 
sideration afterwards  become  good?  May  a  note  which  was 
lost  or  stolen  be  good  in  the  hands  of  the  holder  ?  In  whose 
hands  would  it  not  be  good,  and  in  whose  would  it  be  good  ? 

70.  Is  any  particular  form  of  words  necessary  in  a  note? 
What  must  it  conform  to  ?  Is  the  mere  acknowledgment  of  a 
debt  sufficient  to  constitute  a  note  ?  Is  a  promise  to  pay  in 
merchandise  a  promissory  note  ?  What  example  of  the  rejec- 
tion of  the  word  not  ? 

71.  What  does  form  No.  6  illustrate?  What  is  the  wording 
of  this  form  ?  Is  it  negotiable  or  not  ?  What  makes  it  nego- 
tiable ? 

72.  What  is  form  No.  7  ?  How  does  it  differ  from  No.  6  .? 
Is  it  negotiable  ?  Why  not  ?  How  could  it  be  made  negotiable  : 
By  whom  can  the  latter  be  collected  ? 


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COMMERCIAL   LAW    AND    BUSINESS    FORMS. 


QUESTIONS    FOR    REVIEW. 


9 


73.  Who  is  the  payee  to  a  note  or  draft  ?  Wlio  is  the  payee 
in  form  No.  6  ?  Who  in  No.  7  ?  What  is  the  payee  some- 
times called  ?  Is  the  payee's  name  always  expressed  in  the  face 
of  the  paper  ?  What  may  the  holder  do  when  a  note  is  payable 
to  bearer  only  ? 

74.  What  is  the  person  called  who  is  responsible  for  the  pay- 
ment of  a  note  ?  Who  is  the  maker  in  form  No.  6  ?  Who 
in  form  No.  7?  What  does  the  maker  bind  himself  to  do? 
Need  he  pay  it  before  maturity  ?  If  a  note  is  paid  before 
maturity  and  not  taken  up  may  the  maker  be  obliged  to  pay 
it  again  ? 

75.  What  is  a  due  bill  ?  Is  it  for  money  or  goods  ?  When 
may  it  be  payable  ?  What  is  it  similar  to  when  payable  in 
money  ?     How  is  a  due  bill  written  ? 

76  and  77.  How  does  form  No.  8  differ  from  form  No.  9  ? 

78.  What  is  a  draft  ?  How  many  persons  are  there  to  a  draft  ? 
IIow  does  it  differ  from  a  note  ? 

70.  What  is  a  bill  of  exchange  ?  How  many  kinds  of  bills 
of  exchange  are  there  ?  What  are  they  ?  By  what  other 
names  are  they  known  ? 

80.  What  is  an  inland  bill  ?     What  drafts  are  inland  bills  ? 

81.  What  is  a  foreign  bill  ?  Why  are  they  called  foreign  ? 
How  are  foreisrn  bills  distinijuished  from  inland?  What  are 
foreign  bills  used  for  ?  What  can  be  done  if  a  foreign  bill  is 
lost  ?     What  precaution  is  taken  ? 

82.  Is  any  particular  form  of  words  necessary  in  a  draft  ? 
How  does  the  form  of  a  draft  differ  from  a  note  ? 

83.  What  is  the  wording  of  form  No.  10? 

84.  What  are  the  two  kinds  of  parties  to  a  draft  called  ?  Who 
are  the  original  parties  to  a  note  ?  Who  are  the  original  parties 
to  a  draft?  Who  is  the  drawer  in  form  No.  10?  AVho  is 
the  drawee  ?  Who  is  the  payee  ?  AVho  are  the  original  parties^ 
in  the  draft  ?     Who  may  be  the  subsequent  parties  ? 

85.  Why  are  notes  and  drafts  numbered  ?  Where  is  the  num- 
ber usually  placed  ?  What  do  merchants  have  ?  How  are  the 
numbers  kept  ? 

86.  What  is  the  theory  of  drawing  a  draft?  Are  drafts 
ever  drawn  when  tlie  drawee  is  not  indebted  to  tlie  drawer  ? 


87.  In  what  different  ways  may  a  person  be  liable  on  negotia- 
ble paper  ?  When  is  a  person  absolutely  liable  ?  When  is  he 
conditionally  liable  ?  What  illustration  ?  Is  the  drawee  liable 
before  he  accepts  ? 

88.  When  a  draft  is  first  written  up,  what  is  it?  Is  it  neces- 
sary that  it  be  accepted  if  payable  at  sight  ?  Why  is  there  a 
difference  in  different  States?  W^here  a  draft  is  made  payable 
after  sight,  what  is  necessary  to  be  done  ?  IIow  does  the  drawee 
accept  ?  When  he  accepts  a  draft,  what  does  it  imply  ?  Is  it 
necessary  to  have  a  draft  accepted  when  it  is  payable  after  date  ? 
If  the  drawee  wants  time  to  decide  whether  he  will  accept  or 
not,  what  may  be  done  ?  Suppose  he  refuse  to  return  the  bill  ? 
What  is  an  acceptance  in  effect  ? 

89.  Are  acceptances  always  uniform  in  form?  What  does 
the  statute  of  New-York  require  ?  How  may  the  acceptance 
be  ?     What  effect  has  a  conditional  acceptance  ? 

90.  What  is  the  wording^  in  form  No.  11  ?  Who  is  the  drawer, 
the  drawee,  and  the  payee  ? 

91.  When  the  j^ayee  receives  a  draft  payable  after  sight  what 
should  he  do  ?  By  whom  must  it  be  presented  ?  To  whom 
must  it  be  presented  ?  When  drawn  on  a  partnership,  to  whom 
may  it  be  presented  ?  If  drawn  on  two  persons  who  are  not 
partners,  to  whom  should  it  be  presented  ?  What  time  during 
the  day  should  a  draft  be  presented?  Where  should  it  be 
presented  ?  Is  the  holder  obliged  to  receive  a  conditional 
acceptance  ? 

92.  What  is  a  draft  called  when  the  drawee  refuses  to  accept  ? 
What  is  the  duty  of  the  holder  immediately  after  a  bill  is  dis- 
honored ?  By  whom  should  the  protest  be  made  ?  What  could 
be  done  if  a  notary  public  could  not  be  found  ?  What  is  the 
custom  with  banks?  On  what  day  must  the  protest  be  made? 
If  the  protest  is  not  made  out  in  proper  time,  what  is  the  result  ? 

93.  What  is  a  protest  of  a  note  or  draft  ?  What  is  accom- 
plished by  it  ?  How  and  by  whom  must  it  be  made  ?  By  whom 
may  it  be  made  if  a  notary  public  cannot  be  found  ? 

94.  What  kind  of  negotiable  paper  is  represented  in  form  No. 
1 2  ?  Why  was  it  necessary  to  have  it  protested  ?  Was  Andrews 
absolutely,  or  conditionally,  liable  before  the  protest  ^ 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


95.  What  is  the  instrument  called  which  is  illustrated  in  form 
No.  13  ?  Is  it  a  written  or  a  partly  printed  instrument?  What 
are  its  principal  objects  ?  By  whom  is  it  executed  ?  By  what 
is  it  evidenced  ? 

96.  What  is  next  to  be  done  as  soon  as  the  protest  is  made 
out  ?  To  whom  should  notice  be  sent  ?  To  whom  is  notice  sent 
in  this  instance  ?  What  other  parties  would  often  need  to  be 
notified  ? 

97.  AVhat  is  the  form  of  notice  sent  ?  How  should  it  gener- 
ally be  sent  ?     By  whom  is  it  usually  sent  ? 

98.  What  may  be  done  immediately  after  the  bill  is  protested 
and  notice  sent?  What  is  an  acceptance  for  honor?  For 
whose  honor  may  it  be  accepted  ? 

99.  How  is  it  accepted  for  honor  ?  Who  accepts  this  draft,  and 
for  whose  honor  ?  Is  Mr.  Miller's  acceptance  an  absolute  promise 
ro  pay,  or  is  it  only  conditional?  What  must  the  holder  do 
after  such  an  acceptance  ?  Is  the  holder  obliged  to  receive  an 
acceptance  for  honor  ?  To  whom  must  it  be  presented  for  pay- 
ment at  maturity?  If  the  party  upon  whom  it  was  drawn  does 
not  pay  it  at  maturity,  what  must  be  done  ? 

100.  In  cities  what  is  required  of  a  person  who  wishes  to  be- 
come a  depositor  in  a  bank  ?  Where  his  references  are  satisfac- 
tory, what  is  he  then  requested  to  do  ?  What  is  the  object  of 
writing  his  name  in  the  signature  book  ?  What  is  done  in  cases 
of  partnerships? 

101.  Is  there  more  than  one  way  of  depositing  money? 
What  does  the  depositor  receive  when  he  makes  a  deijosit  ? 

102.  What  is  the  convenience  of  a  bank-book  ?  What  is  gen- 
erally printed  across  the  top  of  this  book?  Are  the  deposits 
entered  on  the  right-hand  or  left-hand  page  of  the  bank-book  ? 
Who  makes  these  entries?  What  does  such  an  entry  show? 
AVhen  a  person  makes  a  deposit  of  money,  what  does  he  fill 
out  ?  When  a  note  is  left  with  a  bank  for  collection,  what  is 
generally  done  with  it?  After  it  is  collected,  what  is  done? 
Do  business  men  generally  consider  it  necessary  to  keep  an 
account  with  the  bank  in  their  regular  books  ?  \Yhat  is  all  that 
is  necessary  ? 

103.  When  a  check  is  paid  by  the  bank,  is  it  at  once  charged 


QUESTIONS    FOR    REVIEW. 


11 


up  on  the  depositor's  bank-book  ?  When"  are  paid  checks  en- 
tered on  the  depositor's  bank-book  ?  When  they  have  all  been 
entered  in  the  bank-book  at  a  particular  time,  what  is  then 
done  ?    When  does  the  depositor  receive  back  his  paid  checks  ? 

104.  What  is  a  deposit  ticket?  What  is  its  convenience? 
What  has  it  printed  on  it  ?  By  whom  is  it  furnished  ?  What 
double  purpose  does  it  serve  ? 

105.  Describe  the  form  and  wording  of  the  deposit  ticket. 
By  whom  is  it  filled  up  ?  To  whom  is  it  given,  and  by  whom  is 
it  kept  ? 

106.  What  is  a  bank  check?  Is  it  negotiable?  Is  any  par- 
ticular form  of  words  necessary  ?  When  paid  at  bank  what  is 
done  with  it  ?  How  often  are  checks  usually  charged  up  in  the 
depositor's  bank-book?  Are  checks  usually  made  payable  to 
order,  or  to  bearer  ?  Are  they  drawn  on  time,  or  payable  at 
sight  ?  Do  they  ever  need  acceptance  ?  What  is  the  difference 
whether  a  check  is  made  payable  to  order,  or  to  the  bearer  ? 
What  record  should  be  kept  of  checks  ? 

107.  How  does  the  check  which  is  illustrated  in  form  No.  16 
read? 

108.  How  does  a  check  serve  the  purpose  of  a  receipt  ?  What 
is  the  custom  of  banks  in  regard  to  the  indorsement  of  checks  ? 
When  paid  checks  are  returned  to  the  depositor,  when  do  they 
answer  the  purpose  of  vouchers  ?  What  is  the  indorsement  of 
the  payee  evidence  of  ? 

109.  What  is  the  presumption  when  a  check  is  drawn  ?  Does 
it  always  prove  true  ?  Do  business  men  ever  draw  checks  when 
they  have  not  enough  money  in  bank  to  meet  them  ?  What  in 
such  cases  do  they  generally  expect  to  do  ?  Why  is  it  not  safe 
to  take  checks  from  strangers  ?  How  may  a  business  man  pro- 
tect himself  when  a  check  is  offered  him  by  a  stranger  ?  How 
is  a  check  certified  ?  By  whom  is  it  certified  ?  When  certified, 
what  is  the  effect  ?     What  is  certifying  similar  to  ? 

110.  What  is  the  wording  of  form  No.  17  ?  What  is  written 
across  its  face  ?     Why  is  it  written  in  red  ink  ? 

111.  When  checks  are  received  by  business  men  what  are 
they  usually  called  ?  When  a  check  is  received  on  account  of  a 
debt,  and  is  not  paid  when  presented  at  bank,  is  the  debt  can- 


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celled?     Suppose  the  holder  were  guilty  of    negligence  in  pre 
scnting  the  check  for  paymcmt,  who  bears  the  loss?     When  is  a 
check  evidence  of  payment  ? 

112.  What  responsibility  rests  upon  the  teller  of  a  bank  in 
respect  to  checks  ?  If  a  bank  })ays  a  forged  check  can  it  recover 
from  the  person  whose  name  was  forged  ?  Can  a  forged  check 
be  ratified  by  the  person  Avhose  name  was  forged  ? 

113.  What  is  a  raised  check?  If  a  bank  pay  a  raised  check 
how  much  can  be  charged  to  the  drawer  ?  What  should  persons 
writing  up  checks  be  careful  to  do  ? 

114.  When  are  checks  payable?  IIow  long  after  a  check  is 
received  can  a  person  safely  hold  it  ?  If  a  bank  fail  after  a 
check  is  drawn  what  determines  which  person  shall  lose  it? 
Upon  what  day  should  a  check  be  dated  ?  Is  a  check  good  when 
it  is  dated  ahead  ? 

115.  What  is  a  certificate  of  deposit?  Can  checks  be  drawn 
against  certificates  of  deposit?  What  is  the  convenience  of 
certificates  of  deposit? 

116.  What  is  the  wording  of  form  Xo.  18  ?  By  what  officer  of 
the  bank  is  it  signed  ?  When  is  it  payable  ?  What  must  the 
holder  do  when  it  is  presented  for  payment  ? 

1 1 7.  What  is  a  teller's  check  ?  What  is  the  theory  of  such  a 
check  ?  Is  a  teller's  check  negotiable  ?  Is  the  bank  liable  for  a 
teller's  check  ? 

118.  What  is  a  special  deposit?  AVhere  a  special  deposit  is 
made  has  the  bank  any  right  to  use  the  money  ? 

1 1 9.  What  is  a  stock  certificate  ?  By  whom  is  a  certificate  of 
bank  stock  signed?  What  amount  does  each  share  generally 
represent  ? 

120.  IIow  is  form  No.  19  worded?  IIow  many  shares  are 
represented  in  this  certificate?  What  is  the  value  of  eacli 
share  ? 

121.  How  are  the  directors  of  a  bank  chosen?  IIow  are  the 
votes  regulated  ?  When  the  owner  of  stock  cannot  attend  an 
election  what  may  he  do? 

122.  AVhat  is  the  wording  of  form    No.  20  the  appointment 
authorizing  A.  P.  Wright  to  act  aa  proxy?     By  whom  is   it 
siojned  ? 


123.  How  may  stock  in  a  bank  be  transferred?  May  it  be 
transferred  by  an  agent  ?  • 

124.  What  is  the  wording  of  form  No.  21?  What  does  it 
authorize  the  ai^ent  to  do  ?  ' 

1 25.  What  is  a  foreign  bill  of  exchange  ?  How  are  they  usually 
drawn  ?  In  what  currency  are  they  generally  payable  ?  Why 
are  they  drawn  in  sets  ?  What  is  the  custom  with  banks  at  the 
present  time  ?  Do  foreign  bills  differ  in  principle  from  inland 
bills? 

126  and  127.  How  are  the  two  drafts  illustrated  in  forms  Nos. 
22  and  23  worded,  so  that  if  both* reached  their  destination  only 
one  need  be  paid  ? 

128.  By  whom  must  the  protest  of  a  foreign  bill  be  made,  and 
by  whom  the  notice  given  ?  Does  the  law  require  tha'^  inland 
bills  be  protested  by  a  notary  public  ?  What  is  the  custom  with 
banks  and  business  men  in  regard  to  protesting  ?  W^hat  is  the 
object  of  protesting?  When  must  the  protest  be  made,  and 
when  must  notice  be  sent  ? 

129.  What  is  business  paper  ?  What  is  business  paper  founded 
upon  ?     In  whose  hands  is  it  good  ? 

130.  What  is  accommodation  paper?  "WTiat  illustration  is 
given  of  such  paper  ?  May  accommodation  paper  become  busi- 
ness paper  ?  What  illustration  of  accommodation  paper  becom- 
ing good  and  valuable  business  paper? 

131.  Are  the  w^ords  "value  received"  indispensable  in  negoti- 
able paper  ?  What  does  the  law  presume  in  relation  to  value  ? 
Where  is  the  burden  of  proof  ?  When  these  words  are  used  what 
do  they  mean  ? 

132.  What  words  are  required  to  make  paper  negotiable  ?  TYhat 
is  the  difference  bet^veen  order  and  bearer  ?  When  cannot  paper 
be  transferred  without  indorsement  ?  What  difference  does  it 
make  in  regard  to  transferring  paper  which  has  been  lost  or  stolen 
whether  it  be  payable  to  order  or  bearer  ? 

133.  May  a  note  be  signed  by  more  than  one  person?  What 
is  a  note  called  when  signed  by  one  person  only  ?  What  is  it 
called  when  signed  by  two  or  more  persons  ? 

134.  May  individual  notes  be  written  in  more  than  one  form? 
In  relation  to  what  may  they  differ? 


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COMilEECIAL    LAW    AND    BUSINESS    FORMS. 


135.  What  is  the  wording  of  form  No.  24?  Who  is  the 
payee  ?     Who  is  the  maker  ? 

136.  What  determines  whether  a  note  is  a  joint  or  a  joint  and 
several  note*? 

137.  What  is  the  wording  of  the  note  given  in  form  No.  25  ? 
Is  it  a  joint  or  joint  and  several  note  ?  Is  there  anything  in  it  to 
indicate  that  one  of  the  makers  only  could  be  made  to  pay  it? 

138.  Which  is  the  safer  for  the  holder,  a  joint  note,  or  one 
which  is  joint  and  several  ? 

139.  What  is  the  wording  of  form  No.  26,  and  how  does  it 
differ  from  the  preceding  form  ? 

140.  How  does  the  wording  of  form  No.  27  differ  from  the 
one  immediately  preceding  ?    Why  is  this  a  joint  note  ? 

141.  When  a  note  is  signed  in  the  partnership  name,  what  is  it, 
jomt  or  several.?  Does  it  make  any  material  difference  whether 
It  IS  worded  "  I  promise  to  pay,"  or  "  we  promise  to  pay  "  ? 
When  a  note  is  written  we  jointly  or  severally  promise,  how  is 
the  word  or  to  be  construed  ?  When  cannot  a  note  signed  in  the 
firm-name  be  collected  ?    When  may  such  a  note  be  collected  ? 

142.  AYlien  does  not  a  note  draw  interest  ?  When  does  it 
draw  interest  ?  Would  either  of  the  preceding  notes  draw  in- 
terest  before  maturity  ? 

143.  What  is  an  indorsement?  What  purpose  does  an  in- 
dorsement serve  ?  What  gives  negotiable  paper  its  chief  value  ? 
How  does  the  payee  transfer  his  title  to  another  ?  Are  indorse- 
ments generally  made  before  or  after  maturity?  When  the 
payee  has  indorsed  a  note  what  is  he  called?  What  is  the 
person  called  to  whom  it  is  delivered  ? 

144.  What  are  the  effects  of  an  indorsement?  What  contract 
does  the  payee  make,  and  with  whom,  when  he  indorses  a  note 
or  draft  ? 

145.  What  is  the  implied  obligation  on  the  part  of  every  en- 
dorser ?  What  is  the  first  subject  of  guaranty  ?  What  is  the 
second,  third,  fourth,  fifth  ?  Is  a  person  who  is  not  of  legal  age 
made  liable  by  an  indorsement  ? 

146.  How  many  different  kinds  of  indorsements  are  men- 
tioned  ?  Which  are  most  commonly  used  ?  Does  each  serve 
some  particular  j)urpose  ? 


QUESTIONS    FOR    REVIEW. 


15 


147.  What  is  a  blank  indorsement  ?  Where  should  the  name 
be  written  ?  Why  is  it  called  a  hlayik  indorsement  ?  How  may  a 
note  or  draft  be  transferred  so  long  as  it  remains  indorsed  in 
blank  ?  What  objection  may  there  be  to  a  blank  indorsement  ? 
What  might  an  innocent  holder  do  ?  How  may  the  holder  of 
such  paper  protect  himself?  What  may  be  write  above  the 
name  ?  Which  end  of  a  note  should  be  uppermost  when  it  is 
indorsed  ? 

148.  What  is  a  full  indorsement?  What  does  a  full  indorse- 
ment do  ?  Is  it  commonly  used  ?  If  a  note  which  is  indorsed 
in  full  be  lost  can  a  person  receiving  it  from  the  thief  get  a  good 
title  to  it  ?     Where  should  indorsements  always  be  made  ? 

149.  How  are  the  blank  and  full  indorsements  illustrated  ? 

150.  How  is  the  note  given  in  form  No.  28  termed  in  order  to 
make  the  indorsements  ?     Who  should  indorse  this  note  ? 

151.  What  kind  of  indorsement  does  form  No.  29  illustrate? 
What  is  written  on  the  back  ?  How  far  from  the  upper  end  is 
the  name  written  ? 

152.  What  kind  of  indorsement  is  illustrated  in  form  No.  30? 
How  is  it  worded  and  arranged  ? 

153.  What  is  a  general  indorsement  ?  What  words  should  be 
omitted  from  the  full  indorsement  to  make  it  a  general  indorse- 
ment ?  What  would  be  the  effect  of  omitting  these  words  in  the 
body  of  the  note  ?     How  is  a  general  indorsement  construed  ? 

154.  AVbat  is  a  qualified  indorsement  ?  Does  such  an  indorse- 
ment transfer  title  without  the  indorser  incurring  any  liability  ? 
What  words  are  used  ?     What  is  this  indorsement  called  ? 

155.  What  kind  of  negotiable  paper  is  illustrated  in  form 
No.  31  ?    Who  is  the  proper  person  to  indorse  it  ? 

156.  What  kind  of  indorsement  is  illustrated  in  form  No. 
32?  How  is  it  written?  How  does  it  differ  from  the  full 
indorsement  ? 

157.  How  is  the  qualified  indorsement  worded?  What  is  the 
object  of  this  indorsement  ? 

158.  What  is  a  conditional  indorsement?  What  kind  of  con- 
dition may  it  be  ?  If  upon  a  condition  precedent,  and  the  event 
happen,  what  is  the  result  ?  Is  the  original  character  of  paper 
affected  by  a  conditional  indorsement  ? 


16 


COMMERCIAL    LAW    AXD    BUSINESS    FORMS. 


QUESTIONS    FOR    REVIEW. 


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159.  What  is  a  restrictive  indorsement  ?  Does  the  omission 
of^  the  words  or.ler  and  bearer  in  an  indorsement  restrict  ? 
What  must  it  contain  ? 

160.  What  form  of  paper  is  ilhistrated  in  No.  34? 

161.  How  is  the  conditional  indorsement  in  form  No.  35 
worded  ? 

162.  How  is  the  restrictive  indorsement  made  ?  Wliat  parti- 
cular word  makes  it  restrictive  ? 

163.  When  may  negotiable  paper  be  transferred  ?  WTiat  dif- 
ference does  it  make  whether  it  be  transferred  before  or  after 
maturity?  How  does  a  person  take  a  bill  before  maturity? 
What  does  he  take  it  free  from  ? 

1 64.  What  is  the  effect  upon  negotiable  paper  if  it  be  not  trans- 
ferred until  after  maturity  ?  Is  any  defect  in  the  paper  removed 
by  an  indorsement  after  maturity?  Does  accommodation  paper 
become  business  paper  by  being  indorsed  after  maturity  ? 

165.  What  beside  indorsement  is  required  to  transfer  the  title 
to  paper  ?     When  may  an  indorsement  be  withdrawn  ? 

166.  When  cannot  paper  be  transferred  without  indorsement? 
When  may  it  be  ?  May  paper  which  is  indorsed  in  blank  or 
payable  to  bearer  be  indorsed  ?  What  is  the  limit  of  indorse- 
ment? If  the  first  indorsement  remain  blank  what  effect  has 
subsequent  indorsements  ? 

167.  AMiat  is  the  necessity  of  protesting?  If  the  holder  fail 
to  get  the  paper  protested  what  will  be  the  consequence  ?  Is  it 
necessary  to  have  a  bill  protested  for  non-acceptance  ?  To  whom 
is  an  indorser  liable  ?  To  whom  may  he  look  for  indemnity  ?  What 
does  the  security  depend  upon  ?  What  distinction  is  made  between 
foreign  and  inland  bills  ?     What  is  the  custom  with  business  men  ? 

168.  What  must  be  done  as  soon  as  the  protest  is  made  out? 
To  whom  must  notice  be  sent  ?  How  soon  must  it  be  sent  ? 
What  should  each  indorser  do  on  receiving  notice  ?  When  is  it 
not  necessary  ?    Should  the  notice  be  in  writing  or  verbal  ? 

169.  By  whom  must  the  notice  be  sent  ?  What  should  the 
notice  contain  and  what  describe  ?  May  a  person  who  is  not  the 
holder  send  the  notice  ?  AVhen  notice  is  sent  by  mail,  how  soon 
must  it  be  deposited  in  the  post-office  ?  If  there  be  delay  in  de- 
livering, will  the  notice  be  good  ? 


170.  When  is  a  person  liable  on  negotiable  paper  without 
notice  ? 

171.  How  did  days  of  grace  originate?  Are  days  of  grace 
uniform  in  number  in  all  places  ?  What  is  the  rule  of  law  con- 
cerning days  of  grace  ?  How  many  days  of  grace  are  allowed 
in  the  United  States  ?  If  a  note  is  made  payable  on  the  first  day 
of  the  month,  when  does  it  become  due  ?  If  the  third  day  of 
grace  come  on  Sunday,  when  is  the  paper  due  ?  If  the  third  day 
of  grace  fall  on  Sunday,  and  the  second  day  be  a  holiday,  when 
does  it  fall  due  ?  How  are  the  davs  of  errace  to  be  counted  ? 
When  are  days  of  grace  added  to  the  original  time  ?  Are  days 
of  grace  allowed  on  sight  paper?  Mention  some  States  where 
they  are  allowed  on  such  paper,  and  some  where  they  are  not. 
Are  there  any  States  in  which  days  of  grace  are  abolished  ? 

172.  What  is  meant  by  the  maturity  of  paper?  What  does 
its  maturity  depend  upon?  What  day  is  excluded  in  the  com- 
putation of  time  ?  If  paper  is  dated  on  the  first  day  of  a 
month,  and  made  payable  in  one  month,  when  is  it  due  ?  Are 
days  of  grace  considered  part  of  the  original  time  ?  Are  thirty 
days  and  a  month  equivalent  terms  ?  In  regard  to  negotiable 
paper,  what  does  a  month  mean  ?     What  illustration  is  given  ? 

173.  When  should  paper  be  presented  for  payment?  If  it  be 
not  presented  on  that  very  day,  what  will  be  the  consequence  ? 
Will  the  maker  of  the  note  and  the  acceptor  of  the  draft  still  be 
liable?  How  if  it  were  presented  the  day  before  maturity? 
What  does  the  law  enforce  ?     Is  negligence  ever  tolerated  ? 

1 74.  AVhen  paper  is  payable  at  a  bank,  what  must  be  done  ? 
What  is  a  sufficient  presentation?  If  paper  is  made  payable 
without  specifying  any  particular  place,  what  must  be  done  ? 
If  the  maker  or  acceptor  has  changed  his  residence,  what  should 
be  done  ?     What  if  the  residence  cannot  be  ascertained  ? 

175.  When  a  note  is  dishonored  by  want  of  payment,  how 
soon  must  it  be  protested  ? 

1 76.  Is  there  any  peculiarity  in  the  wording  of  the  note  in 
form  No.  37  ?     What  is  its  wordinor? 

177.  How  many  times  has  this  note  been  transferred?  How 
many  different  kinds  of  indorsement  have  been  used?  What 
are  the  several  kinds  called  ? 

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178.  Where  was  the  protest  ilhistrated  in  form  No.  39  made? 
Does  it  differ  materially  from  the  preceding  one  made  in  Buffalo, 
N.  Y.  ?  Do  the  forms  differ  in  different  States?  Enumerate 
some  of  the  expenses  for  protesting.  Is  it  any  dishonor  to  have 
one's  paper  protested  ?  To  whom  should  notices  be  sent  in  tliis 
instance  ?     How  soon  must  they  be  sent  ? 

179.  May  there  be  such  a  thing  as  an  accommodation  draft  ? 
What  illustration  is  given  ? 

180.  If  the  indorser's  name  be  forged,  does  the  holder  get  any 
title  ?  Can  a  person  have  or  transfer  any  title  in  paper  which 
violates  law  ? 

181.  When  is  want  of  consideration  a  good  defense?  When 
is  it  sufficient  to  prove  that  it  is  accommodation  paper  ?  When 
is  it  no  defense  ? 

182.  Can  the  holder  of  negotiable  paper  which  has  been  lost 
or  stolen  collect  ?  What  can  the  loser  do  to  protect  himself  ? 
Can  the  owner  of  a  lost  note  collect  it  at  maturity  ? 

183.  When  may  the  holder  of  paper  demand  payment  before 
maturity? 

184.  What  is  it  important  to  know  in  regard  to  State  laws? 
If  a  note  is  made  payable  in  another  State  than  that  in  which  it 
is  made,  by  the  laws  of  which  State  is  it  governed  ?  What  illus- 
tration is  given  ?  What  is  the  rule  in  law  in  regard  to  a  contract 
which  is  not  valid  in  the  State  where  made?  If  a  marriage 
contract  is  valid  where  it  is  made  may  it  be  invalid  in  another 
State  ?     What  is  the  rule  in  regard  to  real  estate  ? 

185.  If  while  paper  is  held  by  a  bank  as  collateral  security 
it  fall  due,  and  the  bank  fail  to  have  it  protested,  who  is  the 
loser  ? 

186.  When  negotiable  paper  is  transferred  by  a  debtor  to  a 
creditor  on  account,  what  important  question  may  sometimes 
arise  ?  When  so  transferred  does  it  operate  as  payment  ?  What 
is  the  rule  in  the  State  of  New-York  in  regard  to  paper  so  trans- 
ferred ?  What  is  an  important  consideration  when  a  receipt  is 
given  for  such  paper  ? 

187.  How  is  the  receipt  in  form  No.  40  worded  ?  Would 
this  receipt  operate  to  make  the  transfer  of  the  paper  discharge 
the  debt  ? 


QUESTION'S    FOR    REVIEW. 


19 


188.  How  does  the  receipt  in  form  No.  41  differ  from  tlie 
preceding  one  ?     Would  the  effect  upon  the  debt  be  the  same  ? 

189.  Are  bank  notes  negotiable  paper?  How  do  they  differ 
from  ordinary  paper  ?  AVhat  are  bank  notes  called  ?  How  are 
thev  transferable  ? 

190.  What  bank  was  the  first  organized  in  the  United  States? 
What  was  the  condition  of  the  finances  at  that  time  ?  What 
was  the  prmcipal  circulating  medium  ? 

191.  What  amount  of  continental  money  was  put  in  circulation  ? 
What  was  the  ultimate  value  of  this  currency  ? 

192.  What  currency  was  used  before  the  national  banks  were 
organized  ?  How  were  State  banks  regulated  ?  How  was  bank 
currency  secured  in  New- York  State  ? 

193.  At  what  time  was  the  National  Currency  Bank  Bill 
passed  by  Congress?  When  was  the  First  National  Bank  Cur- 
rency issued?  How  are  national  bank  bills  secured?  What 
amount  of  bonds  is  each  national  bank  required  to  deposit? 
What  are  national  bank  bills  a  legal  tender  for?  What  is  each 
bank  designated  as  a  depositary  required  to  do  ?  What  effect 
have  these  regulations  on  the  national  currency  ?  Are  national 
bank  bills  a  legal  tender  for  private  debts  ?  Are  they  generally 
accepted  in  payment  of  private  debts  ? 

194.  AVhat  does  form  No.  42  illustrate  ?  What  is  the  wording 
of  a  national  bank  bill  ? 

195.  What  is  the  wording  printed  on  the  back  of  a  national 
bank  bill  ? 

196.  What  are  legal  tender  notes?  How  is  the  coinage  of 
money  and  the  regulation  of  its  value  controlled  ?  What  power 
is  vested  in  Congress  ?  What  is  legal  tender  money  ?  What 
are  legal  tender  bills  commonly  called  ?  When  were  the  first 
legal  tender  notes  issued  ? 

197.  What  is  the  wording  of  a  legal  tender  note? 

198.  What  is  the  wording  on  the  back  of  a  treasury  note  ? 

199.  What  is  a  letter  of  credit  ?  For  what  purpose  is  it  used  ? 
What  convenience  to  a  person  is  it  ?  What  risk  does  he  avoid 
by  a  letter  of  credit? 

200.  What  is  the  wording  of  the  letter  of  credit  illustrated 
in  form  No,  46  ? 


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COMMERCIAL    LA>V    AND    BUSINESS    FORMS. 


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201.  How  does  an  inland  letter  of  credit  differ  from  a  foreign 
one?     Are  the  general  characteristics  about  the  same? 

202.  AVhat  does  form  No.  47  represent?  To  whom  is  the 
credit  to  he  given  ? 

203.  To  whom  is  the  letter  illustrated  in  form  No.  48  sent? 
For  what  purpose  is  the  signature  of  the  bearer  of  the  preceding 
letter  signed  to  this  ? 

204.  What  do  shipping  merchants  sometimes  do  ?  IIow  is  the 
money  obtained  to  pay  for  the  grain  ?  By  whom  is  the  bill  of 
lading  made  out  ?  In  whose  name  is  it  made  ?  What  is  the  bill 
of  ladincr  used  for  ? 

205.  What  is  a  bill  of  lading?  For  how  much  property  was 
this  bill  of  lading  made  ?  AVliere  does  the  i)ro])crty  go  to  under 
the  bill  of  lading?  How  does  this  bill  become  security  to  the 
bank  ?  How  is  it  indorsed  ?  If  made  out  in  the  name  of  the 
shipper  and  indorsed  and  delivered  to  the  bank  what  is  the  effect 
of  it? 

206.  Who  has  the  control  of  the  wheat  as  soon  as  the  bill  of  lad- 
ing is  delivered  to  the  bank  ?  What  does  the  bank  require  the 
shipper  to  do  in  addition  to  assigning  the  bill  of  lading? 

207.  To  whom  must  the  consignee  pay  the  proceeds  from  the 
sales  of  the  wheat  ? 

208.  What  is  the  effect  of  a  payment  of  a  debt  in  counterfeit 
money  ? 

209.  What  is  a  contract  of  debt?  AVhat  are  the  parties  to 
such  a  contract  called  ?  What  does  the  buyer  become  where 
goods  are  sold  and  not  paid  for?     What  does  the  seller  become ? 

210.  What  is  the  duty  of  the  debtor?  What  should  he  do 
when  a  note  is  due  on  a  particular  day  ?  When  are  national 
bank  notes  a  good  tender  ? 

211.  What  is  the  duty  of  the  creditor  when  the  debtor  pays 
according  to  agreement  ?  Where  the  debtor  and  creditor  meet 
and  balance  up  their  accounts,  by  deducting  from  the  debt  some 
demand  of  the  debtor,  what  effect  does  it  have  ?  If  other  prop- 
erty than  money  is  taken  by  the  creditor  does  it  operate  as  pay- 
ment to  that  extent  ?  Has  the  debtor  a  right  to  tender  a  larger 
amount  than  the  debt  ?  When  the  debt  is  in  the  form  of  necfo- 
jiable  paper  can  the  creditor  safely  wait  for  the  debtor  to  pay  ? 


212.  What  is  a  general  depositor  in  a  bank  which  becomes 
Insolvent  ?  What  is  the  relation  between  a  bank  and  a  depositor? 
Where  money  remains  in  bank  indefinitely  without  change  what 
may  be  the  result  ? 

213.  What  does  oral  mean?  When  applied  to  evidence  what 
does  it  mean  ? 

214.  What  is  the  meaning  of  ^>aroZ  when  used  with  reference 
to  agreements  ?     What  is  parol  evidence  ? 

215.  What  is  a  receipt?  By  whom  is  it  executed  and  for 
what  may  it  be  used  ?  What  kind  of  evidence  is  a  receipt  ?  If 
a  receipt  is  written  in  full  of  a  specified  debt  how  is  it  considered  ? 
Has  a  person  a  right  to  demand  a  receipt  as  a  condition  of  pay- 
in  c^  a  debt? 

210.  What  is  the  legal  meaning  of  a  seal  ?  What  is  a  written 
instrument  to  which  a  seal  is  aftixed  called  ?  AVhat  is  the  signifi- 
cance of  a  notarial  seal  ? 

217.  What  is  the  meaning  of  a  specialty  in  law  ?  If  a  written 
instrument  is  sealed  what  is  it  called?  Is  it  ever  called  a 
specialty  if  it  be  not  sealed  ? 

218.  What  illustration  is  given  of  an  impersonal  payee? 
What  must  negotiable  paper  have  to  indicate  a  payee?  Where 
a  check  is  made  payable  to  cash  or  order  how  is  it  held  ? 

219.  What  illustration  is  given  of  a  promise  to  accept  a  draft  ? 

220.  What  is  the  illustration  of  checks  which  were  post-dated  ? 
If  one  party  failed  to  pay  is  that  a  reason  why  the  other  should 
not  be  a  honafide  holder  ? 

221.  What  defense  was  offered  to  a  suit  brought  in  Indiana 
on  a  note  where  the  signature  Avas  obtained  by  fraud?  How- 
did  the  court  hold  ? 

222.  Where  a  note  was  placed  in  an  agent's  hands  for  collec- 
tion and  wrongfully  converted  to  the  agent's  own  use,  and  was 
sold  under  an  execution  against  him,  did  the  purchaser  get  a 
good  title  ? 

223.  If  the  principal  maker  of  a  note  die  is  the  holder  bound 
to  notify  the  surety  that  it  is  not  paid  ? 

224.  Where  a  note  was  made  payable  for  a  certain  sum 
named,  with  a  blank  per  cent,  in  attorney's  commissions,  was  it 
held  negotiable  or  not  ? 


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COMMERCIAL    JLAW    AND    BL'SINESS    FORMS. 


225.  What  instance  of  immaterial  alteration  of  note? 

226.  When  is  a  person  liable  to  a  bank  on  accommodation 
paper  ? 

227.  What  illustration  is  given  to  show  that  a  note  signed  by 
a  vestryman  of  a  church  is  not  a  note  of  the  church  or  corpora- 
tion ? 

228.  What  illustration  is  given  of  the  transfer  of  notes  as  a 
gift  just  before  death  ? 

229.  What  rate  of  interest  does  a  note  drau-  after  it  is  due  ? 

230.  Is  the  fact  that  a  note  was  bought  for  about  one-half  of 
its  face  value  sufficient  to  put  a  purchaser  on  inquiry  as  to  con- 
sideration ? 

231.  What  is  the  wording  of  the  order  drawn  by  J.  B.  Randall 
on  John  H.  Erck  ?    Why  was  this  order  held  to  be  not  absolute  ? 

232.  What  is  the  peculiarity  of  the  statutes  of  Indiana  in 
regard  to  negotiable  notes  ?  Why  was  the  note  here  mentioned 
held  to  be  void  ? 

233.  What  instance  is  mentioned  of  a  note  being  given  which 
was  held  to  be  void  on  account  of  illegal  consideration  ? 

234.  What  illustration  is  given  of  want  of  due  diligence  in 
giving  notice  of  protest  ? 

235.  What  particulars  in  relation  to  the  circumstances  are  given 
of  a  man  going  to  a  bank  to  collect  a  certificate  of  deposit  ? 

236.  When  a  note  is  written  "  I  promise  to  pay,"  and  is  signed 
by  two  persons,  what  kin<l  of  note  is  it  ? 

237.  What  do  the  statutes  of  Ohio  require  when  a  note  is 
given  for  a  patent  right  ?  What  effect  does  the  transfer  of  such 
a  note  have  in  cutting  off  d<}fenses  ? 

238.  Where  a  note  is  written,  ''I  promise  to  pay  to  the  order 
of  myself,"  and  is  signed  by  two  persons,  under  what  circum- 
stances may  it  be  negotiated  by  the  indorsement  of  o?ie  of  the 
makers  ? 

239.  What    are    the    circumstances   relating    to    the    bill    of. 
exchange  here  given?     What  did  the  court  hold  in  regard  to 
the  matter  ? 

240.  What  is  payment?  When  payment  is  pleaded  as  a 
defense  what  must  the  defendant  prove?  Payment  is  doing 
what  ?     How  must  payment  be  to  extinguish  the  debt  ? 


QUESTIONS    FOR   REVIEW. 


23 


241.  What  is  evidence  of  payment?  What  illustration  is 
given  ? 

242.  What  is  of  great  importance  in  regard  to  business  paper? 
What  should  be  done  ?    What  has  one  no  right  to  do  ? 

243.  What  should  be  done  with  business  letters  which  are 
written  ?     What  with  those  which  are  received  ? 

* 

SALES  OF  PERSON" AL  PEOPEETY. 

244.  Is  the  sale  of  personal  property  governed  by  the  same 
principles  of  law  as  other  contracts  ?     What  is  barter  ? 

245.  What  is  a  sale  ?  How  is  the  word  sale  here  used  ?  Are 
contracts  to  sell  the  same  as  sales  ?  May  there  be  a  transfer  of 
title  without  a  sale  ?  What  may  the  owner  do  when  goods  have 
been  wrongfully  converted  by  another  ?  May  he  sue  for  the 
wrongful  conversion  as  well  as  the  value  ?  What  must  be  done 
to  constitute  a  sale?  What  are  the  elements  essential  to  a  valid 
sale  ? 

246.  What  kind  of  existence  must  the  thing  sold  have  ?  What 
if  goods  were  destroyed  when  they  were  supposed  to  be  sold  ? 
Must  the  goods  be  in  the  possession  of  the  vendor  ?  What  if 
they  were  in  the  course  of  consignment  ?  What  may  be  sold 
which  is  not  in  existence  ?    AVhat  illustration  ? 

247.  Can  a  mere  possibility  be  sold  ?  Can  a  person  sell  all 
the  corn  he  may  hereafter  buy  ?  May  he  contract  to  sell  all  the 
corn  he  may  buy  in  market  during  a  certain  time  ?  Would  such 
a  contract  be  a  sale  ? 

248.  What  is  essential  to  a  valid  sale  ?  Can  a  contract  be 
enforced  for  the  sale  of  property  which  is  prohibited  by  statute? 

249.  What  is  price?  Could  there  be  a  sale  without  price? 
What  must  the  price  be  in  to  constitute  a  sale  ?  What  sum  must 
it  be  ?  How  can  the  price  be  fixed  ?  What  if  anything  happen 
to  prevent  the  price  being  ascertained  ?  Will  inadequacy  of 
price  render  the  contract  void  ? 

250.  What  is  necessary  in  regard  to  consent  of  the  parties  ? 
What  if  there  be  any  mistake  about  the  identity  of  the  goods  or 
in  regard  to  the  price  offered  or  demanded  ?  When  sales  are 
negotiated  by  letter  at  what  time   must  the  acceptance  be  to 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


make  the  contract  binding  ?     When  may  the  vendor  withdraw 
his  proposition  ? 

251.  Does  the  common  law  require  any  special  form  of  words 
or  writing  or  any  solemnity  to  constitute  a  sale  ?  What  is  all 
that  is  necessary  ?  How  has  the  common  law  been  modified 
when  the  price  is  above  a  certain  amount  ? 

252.  When  was  the  British  statute  of  frauds  enacted  ?  What 
does  it  require  ?  Has  this  statute  been  re-enacted  in  the  states  ? 
Is  the  statute  as  now  used  in  the  several  States  nearly  identical 
in  its  provisions  ? 

253.  To  what  kind  of  contracts  of  sales  does  the  statute  of  frauds 
apply?  To  what  kind  of  executory  contracts  does  it  apply? 
What  is  the  clause  applicable  to  sales  of  personal  property  con- 
tained in  the  statute  of  New-York  ?  To  what  contracts  is  it  not 
applicable  ? 

254.  What  application  has  this  statute  to  the  sale  of  property 
which  exists  in  the  same  condition  as  it  is  to  be  delivered  ?  Does 
it  embrace  executory  contracts  for  the  delivery  of  articles  which 
have  to  be  manufactured  ?  What  illustration  is  given  of  the 
sale  of  wheat  ?     What  in  regard  to  indorsing  a  note  ? 

255.  What  does  the  statute  require  in  regard  to  contracts 
which  are  not  to  be  performed  within  a  year  ?  How  must  a 
parol  contract  be  to  come  within  the  statute  ?  Where  a  contract 
cannot  be  performed  within  a  year,  what  will  not  a  partial  per- 
formance do  ?     What  illustration  is  given  ? 

256.  What  provision  in  the  statute  in  regard  to  promises  to 
answer  for  the  debt  of  another?  What  may  the  writing  be? 
What  kind  of  promises  does  the  statute  apply  to?  What  prin- 
ciple was  early  decided  in  English  courts?  What  instances 
are  given  ?  Is  the  credit  always  given  to  the  party  who  receives 
the  goods?    What  right  has  the  party  who  did  not  receive  the 

goods  ? 

257.  How  should  goods  be  sent  to  the  purchaser?  When  no 
directions  are  given  how  should  they  be  sent  ?  If  ordinary  care 
is  taken  in  sending  goods,  who  takes  the  re>;ponsibility  ?  How 
lonor  are  goods  at  the  risk  of  the  seller  ?  When  does  the  seller's 
risk  terminate? 

258.  What  is  continued  possession  of  the  vendor  presumptive 


QUESTIONS   FOR   REVIEW, 


25 


evidence  of  ?  What  is  the  presumption  where  goods  are  not 
delivered  after  a  sale  ?  If  such  goods  are  sold  to  another  person 
and  delivered  does  he  get  a  good  title  ? 

259.  What  is  the  difference  between  an  entire  sale,  and  one 
which  is  severable  ?  What  illustration  is  given  of  a  contract 
which  is  entire  and  one  which  is  severable  ?  How  may  a  con- 
tract which  was  entire  be  made  severable  ? 

260.  What  are  conditional  sales  ?  What  if  the  party  fail  to 
pay  at  the  specified  time  ?  Can  a  conditional  buyer  transfer  the 
title  by  sale  ?  When  goods  are  sold  on  trial  Jiow  long  may  they 
be  kept  ?  What  if  the  buyer  fail  to  return  them  ?  If  a  man  sell 
with  condition  that  he  may  buy  the  goods  back  within  a  speci- 
fied time  when  does  the  option  expire  ? 

261.  What  facts  must  the  vendor  make  known  to  the  pur- 
chaser ?  What  facts  need  he  not  make  known  ?  What  would 
the  moral  law  require  of  him  ?  If  misrepresentations  induce  the 
vendee  to  buy  can  he  get  any  redress  ? 

262.  May  a  person  have  the  possession  of  goods  without 
bein<'  the  owner?  Can  he  make  a  valid  sale  without  bein<:^  the 
owner?  Can  stolen  goods  be  sold  so  as  to  give  a  good 
title  ?  When  may  a  person  get  a  good  title  to  goods  although 
they  may  have  been  stolen  ? 

263.  When  there  is  no  agreement  as  to  the  place  of  delivery 
of  goods  sold,  where  should  they  generally  be  delivered? 
Where  a  sale  is  to  pay  a  debt  where  should  the  delivery  be  ? 

264.  What  is  "  good-will  ?"  In  what  kinds  of  business  is  good- 
will often  of  great  value  ?  What  should  the  party  selling  the 
"  good-will "  be  required  to  do  ? 

265.  How  must  delivery  of  goods  be,  to  be  good?  Is  de- 
-livery  to  a  carrier  a  good  delivery  to  the  vendee  ?  Can  a  broker 
deliver  for  one  party  and  accept  for  another? 

266.  How  small  a  portion  of  the  goods  sold  may  be  delivered 
to  make 'it  a  complete  delivery  ?  How  must  the  vendee  accept  ? 
What  peculiar  kinds  of  delivery  are  there  ? 

267.  What  does  a  valid  sale  do?  What  if  the  ownership  be 
not  transferred?  Can  the  vendee  demand  the  goods  until  he 
pay  the  price  ?  If  no  credit  be  given  how  can  the  vendor  de- 
mand the  price  ?  Where  the  offer  to  sell  at  a  certain  price  is 
Accepted,  but  the  vendee  refuses  to  pay,  what  may  the  vendor  do  ? 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


268.  What  is  required  as  to  the  property  in  order  to  complete 
the  sale  ?  If  the  contract  specify  a  particular  article  in  existence, 
may  any  similar  article  be  delivered  ?' 

269.  When  does  the  ownership  of  goods  sold  pass  in  executory 
contracts?  If  the  party  who  agreed  to  sell  refuses  to  deliver 
what  remedy  has  the  buyer  ? 

270.  What  care  must  the  vendor  take  of  the  goods  after  they 
are  sold  ?     What  will  he  be  liable  for  ? 

271.  What  is  a  "bill  of  parcels"  and  what  is  it  frequently 
called?  ^ 

272.  What  is  the  arrangement  of  the  bill  here  given?  How 
are  the  items  arranjred  ? 

273.  What  is  a  bill  of  sale?  Is  a  bill  of  sale  necessary  when 
the  property  is  delivered  or  part  or  all  of  the  price  is  paid  ?  Is 
it  convenient  as  evidence  of  transfer  of  title?  What  must  be 
done  to  protect  the  purchaser  against  creditors  ?  If  an  actual 
and  continued  change  of  possession  does  not  accompany  the  sale 
what  will  be  the  consequence  ? 

274.  What  is  the  wording  of  form  Xo.  52  ?  Why  is  it  sealed 
and  witnessed  ? 

275.  What  is  tlic  contract  given  in  form  No.  53?  What 
purpose  does  the  bill  of  sale  serve?  What  is  the  object  of  the 
warranty?     What  is  the  wording  of  the  contract  ? 

276.  What  is  a  chattel  mortgage?  If  the  debt  is  not  paid 
at  the  time  agreed  upon  what  may  the  mortgagee  do  ?  What 
right  has  the  mortgagor  ?     When  is  the  mortgagee  bound  to  sell  ? 

277.  What  is  the  form  and  wording  of  the  chattel  mort<ra(re 
given  in  form  No.  54  ?  °  ^ 

278.  How  does  the  form  given  in  No.  55  differ  from  the  pre- 
ceding one  ?     How  does  a  mortgage  differ  from  a  bill  of  sale  ? 

279.  Why  does  a  chattel  mortgage  need  renewing?  How 
long  does  it  run  ?  What  is  the  language  of  the  instrument  of 
renewal  given  in  form  No.  56  ? 

280.  What  is  done  if  the  debt  is  not  paid  at  the  time 
agreed  upon?  Is  the  property  sold  at  private  sale,  or  at  auc- 
tion ?  What  is  the  wording  of  the  notice  of  sale  Laven  in  form 
No.  57? 


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QUESTIONS    FOR    REVIEW. 


27 


WAEEAXTY. 

"     281.  What  kind  of  warranty  may  be  given  when  a  sale  is 
made  ?     AVliat  is  the  maxim  of  the  common  law  ? 

282.  What  does  a  general  warranty  cover?  What  does  it 
not  cover  ?  How  may  the  buyer  relieve  himself  from  all  responsi- 
bility ?  Does  anything  which  is  known  to  the  purchaser  come 
within  the  warranty  ? 

283.  What  may  an  express  warranty  be?  To  what  extent 
will  the  vendor  be  bound  by  an  express  warranty  ?  Will  he  be 
bound  by  any  representations  made  after  the  sale  ?  Upon  what 
must  the  warranty  operate  to  be  binding  ?  Do  declarations  of 
opinion  constitute  a  warranty  ? 

284.  What  is  a  special  warranty?  What  warranty  may  be 
implied  when  a  particular  thing  is  ordered  of  a  manufacturer 
for  a  special  purpose  ?  If  the  buyer  select  the  thing  will  there 
be  any  warranty  on  the  part  of  the  vendor  ? 

285.  What  implied  warranty  is  there  when  a  person  sells 
property  he  has  in  possession  ?  When  would  there  be  an  implied 
warranty,  if  the  goods  sold  were  not  in  the  vendor's  possession  ? 
When  the  goods  cannot  well  be  examined  what  implied  warranty 
will  there  be  ? 

2S6.  If  there  is  a  breach  of  warranty  can  the  vendee  return 
the  goods?  What  is  his  only  remedy?  Where  the  vendor 
knows  that  a  thing  is  ordered  for  a  special  purpose,  and  it  is 
not  fit  for  the  purpose  what  may  the  buyer  do  ? 

287.  Where  goods  are  bought  by  sample  what  is  the  usual 
implied  warranty?  Does  the  warranty  apply  to  the  quality  of 
the  sample  ?  What  is  all  that  the  vendee  can  claim  ?  Do  all 
sales  made  by  sample  create  an  implied  warranty  ?  What  is  the 
rule  ?     What  must  there  be  between  the  parties  ? 

288.  What  case  is  reported  in  Massachusetts  of  a  descriptive 
bill  of  sale  ?  Did  the  bill  of  sale  constitute  a  warranty  ?  What 
illustration  is  given  of  a  warranty  of  a  horse  ?  What  was  the 
case  tried  in  Pennsylvania? 

289.  What  implied  warranty  will  there  be  when  goods  are  to 
be  manufactured  and  furnished  for  a  particular  r>urpose  ?  What 
is  a  reason  for  this  ? 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


QUESTIONS    FOR    REVIEW. 


29 


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290.  When  the  veiKlor  knows  that  the  buyer  depends  upon 
him,  instead  of  using  his  own  judgment  in  regard  to  latent  defects 
will  tliere  be  an  implied  warranty  ?  What  is  such  implied  Avar- 
ranty  grounded  upon  ? 

GUAEAXTY. 

291.  What  is  a  sruarantv? 

292.  How  many  essentials  are  there  to  a  guaranty?  What 
are  they  ? 

293.  AVhat  notable  difference  in  regard  to  the  consideration 
in  guaranty  ?  Need  the  guarantor  derive  any  benefit  from  the 
contract?  When  must  the  promise  be  made  to  be  binding? 
What  will  be  a  sufhcient  consideration  ? 

294.  Must  there  be  a  principal  debtor  ?  Can  the  guaranty  be 
larger  than  the  principal  debt  ?  :\ray  it  be  smaller?  IIow  may 
a  guaranty  become  a  principal  debt?  By  what  is  the  guaranty 
usually  measured?  If  the  liability  of  the  principal  debtor  is 
lessened  what  effect  will  it  have  on  the  surety  ? 

295.  What  is  necessary  to  make  the  contract  bindir^g? 
When  does  an  offer  to  become  guarantor  become  legally  binding  ? 
AVhen  will  there  be  an  implied  acceptance?  When  is  no  notice 
of  acceptance  required  ? 

296.  What  is  the  wording  of  form  Xo.  58? 

297.  What  is  the  wording  of  form  Xo.  59? 

298.  If  the  liability  of  the  principal  is  varied  without  the 
consent  of  the  guarantor,  what  would  be  the  consequence? 
What  if  Mr.  Wells  should  supply  :Mr.  ^lonroe  with  fifty  dollars, 
worth  of  groceries?  What  example  of  a  collector  of  taxes? 
What  of  a  cashier  for  a  partnership  ? 

299.  What  is  the  clause  quoted  from  the  statute  of  frauds  in 
relation  to  guaranty  ?  What  instance  of  a  guaranty  in  relation 
to  a  horse  ? 

300.  If  the  obligation  is  extended  by  law  what  effect  will  it 
have  on  the  guarantor?  What  illustration  of  a  joint  stock  com- 
pany ?  What  of  a  bond  given  for  a  City  or  County  Treasurer  ? 
Can  a  guarantor  renounce  his  liability  ? 

301.  Is  a  general  guaranty  negotiable  with  a  note  or  draft 
when  made  on  its  face  ?     How  if  a  person  write  his  name  across 


the  back  of  a  note  before  it  is  delivered,  is  the  liability  the  same 
in  all  the  States  ?  How  would  such  a  person  be  considered  in 
New- York  ? 

302.  What  is  the  general  rule  in  regard  to  the  construction  of 
a  guaranty  ?  Who  only  can  hold  the  guarantor  liable  when  it 
relates  to  a  particular  person  ?  If  it  relate  to  a  particular  office 
what  does  it  embrace?  What  illustration?  What  will  the 
guarantor  be  bound  for  ? 

303.  What  are  the  following  forms  given  to  illustrate  ? 

304.  What  is  the  wording  of  form  Xo.  60  ?  Is  it  a  continuing 
guaranty  ? 

305.  Is  the  guaranty  given  in  form  Xo.  61  a  limited  or  a 
continuing  guaranty  ? 

306.  What  is  the  wordinnr  of  form  Xo.  62  ?  Is  it  a  continuing- 
guaranty  ? 

307.  What  is  the  substance  of  form  Xo.  63,  is  it  continuing? 
What  is  it  restricted  to  ? 

308.  When  does  the  liability  of  the  guarantor  commence  ? 
What  if  the  debt  be  illegal  ?  What  else  will  release  the  guaran- 
tor? 

309.  What  right  has  the  creditor  against  the  surety  other  than 
to  proceed  against  him  for  the  debt  ? 

310.  What  implied  agreement  is  there  on  the  part  of  the 
creditor  ?  What  is  he  bound  to  show  ?  For  what  reasons  may 
the  guarantor  be  discharged  ? 

311.  When  will  want  of  notice  discharge  the  guarantor? 

312.  When  will  expiration  of  time  discharge  the  guaran- 
tor ?  How  can  he  be  discharged  when  the  time  is  not  limited  ? 
In  what  other  ways  may  he  be  discharged  by  expiration  of 
time? 

313. -What  kind  of  alteration  of  contract  will  discharge  the 
surety  ?  If  the  principal  debtor  is  discharged,  or  the  time  ex- 
tended, what  effect  will  it  have  on  the  guarantor  ? 

314.  What  will  release  of  the  principal  do?  May  release  of 
the  principal  sometimes  be  inferred  ?  Does  a  release  of  the  guar- 
antor release  the  principal  ? 

315.  What  will  a  merger  of  the  debt  in  a  higher  security  do  ? 
What  illustration  ? 


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COMMERCIAL    LAW    AXD    BUSINESS    FORMS. 


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316.  If  the  creditor  give  more  time  to  the  debtor  without  eon- 
sent  of  the  surety,  what  effect  will  it  have  upon  the  liability  of 
the  guarantor  ?  , 

317.  What  will  concealment  of  something  material  from  the 
guarantor  do  ?     What  illustration  ? 

318.  In  what  peculiar  way  may  the  liability  of  the  guarantor 
sometimes  be  extinguished  ? 

319.  What  may  the  guarantor  sometimes  demand  of  the 
creditor  ?  May  he  make  this  demand  if  he  did  not  know  there 
were  any  securities  at  the  time  he  became  guarantor? 

320.  When  only  has  the  guarantor  any  claim  against  the  prin- 
cipal debtor  ?     What  may  he  do  as  soon  as  the  debt  becomes  due  ? 

321.  What  may  a  co-surety  do  if  he  pay  more  than  his  share 
of  the  debt  ? 

322.  What  does  the  guaranty  in  form  No.  64  relate  to  ? 

323.  AVhen  a  guaranty  is  for  the  collectibility  of  paper,  at 
what  time  would  the  guarantor  become  liable  ? 

324.  In  the  guaranty  given  in  form  No.  66  at  what  time  could 
an  action  be  brought  against  the  guarantor  ? 

LIEX. 

325.  What  is  lien  ?  Upon  what  does  it  rest  ?  If  the  holder 
of  the  lien  allows  the  goods  to  go  out  of  his  hands  what  will  be 
the  result  ?  What  are  the  different  kinds  of  lien  ?  IIow  long 
does  the  seller  of  goods  have  the  right  of  lien  ?  W^hat  does  a 
sale  of  goods  imply  ?  If  goods  are  sold  on  credit  what  may  the 
buyer  do  ?  If  before  delivery  the  buyer  becomes  insolvent,  what 
may  the  seller  do  ? 

326.  Will  a  delivery  of  part  of  the  goods  destroy  the  right  of 
lien  ?  What  is  the  rule  ?  If  a  part  of  the  price  be  paid,  will  it 
destroy  the  lien  ?  Has  the  vendor  any  right  of  lieu  while  the 
goods  are  in  the  hands  of  his  factor? 

327.  How  can  an  equitable  lien  be  created  ?  What  illustration  ? 
Is  it  the  owner  of  the  property  who  has  the  right  of  lien  ?  How 
may  liens  exist  in  equity  ? 

328.  May  an  agent  have  the  right  of  lien  on  the  i)roperty  of 
his  principal  ?  What  is  the  general  lien  ?  What  may  the  claim 
be  for  ?     What  may  the  lien  result  from  ?     What  does  the  usage 


QUESTIOXS   FOR   REVIEW. 


31 


of  trade  give  the  factors  ?  When  a  consignment  is  made  to  an 
agent,  with  particular  instructions  to  apply  the  proceeds  to  a  i)ar- 
ticular  debt,  can  he  hold  the  proceeds  by  right  of  lien  of  a  bal- 
ance of  account  ? 

329.  What  lien  do  mechanics  generally  have  ?  What  limita- 
tions to  their  right  in  some  States  ?  Under  what  kind  of  contract 
must  the  work  be  done  in  some  States  to  give  them  the  rif»-ht? 
Why  are  these  conditions  required  ?  What  consequences  might 
follow  if  the  time  were  unlimited  ? 

330.  What  is  the  common  carrier's  lieu  founded  upon  ?  What 
is  it  of  the  nature  of  ?     What  may  he  do  after  a  reasonable  time  ? 

331.  Upon  what  ground  are  bailees  entitled  to  lien  ?  Does  it 
apply  to  cases  where  money  and  services  have  been  expended 
upon  the  property  but  no  changes  made  in  it  ?  Has  the  keeper 
of  a  boarding  stable  a  lien  for  the  keeping  of  horses  ?  What 
might  give  him  a  lien  ? 

.      332.  What  lien  has  an  inn-keeper?     Has  he  a  lien  on  baggage 
left  by  a  person  who  is  not  a  guest  ? 

333.  What  will  terminate  a  lien  ?  To  whom  must  the  debt  or 
claim  be  due  in  order  that  the  lien  may  hold  ?  If  a  party  have 
the  right  of  lien  but  claims  to  hold  the  goods  for  some  other 
reason  how  will  it  affect  the  lien  ?  In  what  other  ways  may  a 
lien  be  terminated  ? 

334.  How  long  will  a  lien  continue  ?  Can  a  delivery  be  made 
to  pass  the  title  without  losing  the  right  of  lien  ? 


COMMO^^  CAEEIEE. 

335.  What  is  a  common  carrier?  What  may  the  compensa- 
tion be  ?  Are  passenger  carriers  considered  common  carriers  ? 
What  are  the  elements  of  a  common  carrier  ? 

336.  Is  the  common  carrier  under  obligation  to  carry  for  the 
public  generally  ?     What  kind  of  goods  may  he  refuse  ? 

^  337.  What  does  the  common  carrier  charge  for?  Has  he  any 
right  to  charge  one  person  more  than  another?  How  mav  his 
charges  be  regulated  ?     What  if  he  assume  extraordinary  risk  ? 

338.  \\Tiat  standing  offer  does  he  make  to  the  public  ?  Is  he 
liable  if   he  refuse   to  accept   goods  except   for   good   reason  ? 


32 


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QUESTIONS    FOR    REVIEW. 


33 


II 


1  f 


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'  » 


TTIiat  must  the  owner  of  the  goods  do  if  he  intend  to  hring  an 
action  for  damages  ?  At  what  times  need  not  the  carrier  receive 
goods  ? 

330.  How  and  for  Avliom  dtx^s  a  private  carrier  carry  goods? 
When  does  he  become  a  common  carrier  ?  Does  a  mere  carriatre 
for  hire  make  one  a  common  carrier?  What  is  the  liability  of  a 
private  carrier  ? 

340.  When  does  the  liability  of  the  common  carrier  be^rin? 
What  fixes  his  liability  ?  What  is  indispensable  to  fix  his  liabil- 
ity? What  resjwnsibility  does  he  assume  as  soon  as  the  goods 
are  fully  accepted ?  For  what  kind  of  losses  is  he  not  liable? 
May  a  person  be  a  common  carrier  and  a  private  carrier  at  the 
same  time  ?     Is  he  liable  for  losses  occasione<l  bv  his  own  servants  ? 

341.  What  kind  of  acceptance  is  sufficient  to  fix  the  liability 
of  the  carrier?  What  illustration?  What  kind  of  acknowledg- 
ment is  made  when  the  goods  are  received  ? 

342.  Where  goods  are  delivered  to  a  common  carrier  to  be 
transported  by  several  separate  companies,  and  the  goods  are  lost, 
to  which  company  may  the  owner  look  for  indemnity?  What 
is  the  law  in  New-York  ? 

343.  What  is  form  No.  67  called?  Who  is  the  shipper? 
What  was  shipped  ?     To  whom  ? 

344.  What  kind  of  care  must  the  common  carrier  take  of  the 
goods  he  carries?  IIow  is  he  bound  to  follow  instructions? 
AVhat  must  he  provide  for  the  carriage  of  goods  ?  What  if  he 
receive  reasonable  instructions  and  does  not  obey  them  and  the 
goods  are  lost  ? 

345.  What  has  the  strictness  of  his  liability  induced  him  to 
attempt?  How  have  the  courts  held  in  regard  to  notices  to 
avoid  liability  ?  What  may  the  carrier  do  ?  What  is  the  policy 
of  the  law  in  re<]:ard  to  netrlect  of  carrier  ? 

346.  AVhen  does  the  carrier's  liability  terminate?  If  no  time 
is  specified  for  delivery  when  must  it  be  made  ?  Is  the  contract 
to  deliver  ever  suspended?  When  will  the  law  excuse  the 
carrier  ? 

347.  Where  is  the  proper  place  to  deliver  ?  How  if  a  particu- 
lar place  is  agreed  upon  ?  What  may  the  carrier  do  if  the  con- 
signee refuse  to  accept  the  goods  ? 


348.  To  whom  should  delivery  be  made  ?  Suppose  the  goods 
are  delivered  to  the  wrong  person  by  mistake?  How  may  de- 
livery be  made  ? 

349.  When  does  the  liability  of  the  carrier  cease  ?  What  is 
the  liability  of  the  warehouseman  ? 

850.  To  whom  does  the  carrier  generally  look  for  the  payment 
of  freight  ?  If  the  consignee  refuses  to  pay,  what  means  has  the 
carrier  of  enforcing  payment  ? 

351.  What  right  is  given  the  common  carrier  for  the  carriage 
of  goods  ?  How  may  he  lose  the  right  of  lien  ?  What  ma?  the 
carrier  do  if  the  freight  is  not  paid  within  a  reasonable  time? 

SHIPPING. 

352.  What  is  the  meaning  of  shipping  as  here  used  ?  Does 
the  transportation  of  goods  by  water  come  Avithin  the  scope  of 
the  common  carrier  ?  Who  are  the  parties  concerned  in  the 
transportation  of  goods  by  water? 

353.  What  do  the  owners  of  vessels  frequently  do  ?  When  a 
ship  is  hired  what  is  it  called  ?  What  is  the  contract  for  the 
letting  of  the  ship  called?     Who  is  the  charterer  ? 

354.  What  may  the  owner  of  the  goods  do?  When  a  ship  is 
chartered  for  the  season  who  generally  employs  the  officers  and 
crew  ?     How  is  much  of  the  shipping  carried  on  ? 

355.  What  is  the  contract  contained  in  the  charter  party  de- 
fined to  be?  By  whom  is  the  charter  party  usually  made  ?  How 
are  the  terms  of  the  charter  party  enforced  ?  What  clause  is  gen- 
erally inserted  ?    What  does  the  charter  party  usually  describe  ? 

356.  What  is  a  ship  called  when  it  is  not  chartered  but  carries 
goods  for  the  public  ?     Is  such  a  ship  a  common  carrier  ? 

357.  What  is  a  bill  of  lading?  How  many  bills  of  lading  are 
usually  made?  For  whom  are  they  made  ?  What  do  the  three 
constitute  ?  Is  a  bill  of  lading  negotiable  ?  For  what  purpose 
is  it  sometimes  used  ?  What  is  the  shipper  called  ?  What  is 
the  person  called  to  whom  the  goods  are  shipped  ? 

358.  What  are  the  duties  of  the  ship  owner?     What  must  he 

supply  the  ship  with?     What  must  he  see  to?     What  must  he 

have  on  board  ?     How  must  he  deliver  the  goods  ? 
(3*) 


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34 


COMMERCIAL    LAW    AND    BUSINESS    FOKMS. 


QUESTIONS    FOR    REVIEW. 


35 


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359.  What  are  the  duties  of  the  merchant  ?  What  is  i^rimacre  ? 
Wl)en  should  the  freight  be  paid  ?  What  does  the  amount  of 
freight  depend  upon  ? 

360.  What  is  a  maritime  loan?  What  is  given  as  security 
for  such  loan  ?  When  the  bond  is  on  the  ship  what  is  it  called  ? 
When  on  the  cargo,  what  ?  AVhat  is  the  foundation  of  such  a 
loan  ?  AVhat  does  the  payment  of  the  loan  depend  upon  ?  Who 
takes  the  risk  ? 

361.  What  is  meant  by  general  average?  What  is  the  simplest 
case  of  general  average  ?  What  must  be  the  cause  of  throwing 
goods  overboard  in  order  to  come  under  general  average  ?  What 
cases  will  not  come  under  general  average  ?  What  is  the  property 
called  which  is  lost?  What  risfht  does  a  ireneral  average  cfivo 
the  owner  of  the  lost  jjoods  ? 

362.  What  are  the  contributory  interests  ?  What  is  exempt 
from  assessment  ?  What  proportion  does  the  ship  pay  ?  What 
is  the  customary  way  of  making  a  settlement  ? 

363.  What  is  salvage  ?  Why  is  a  large  compensation  allowed  ? 
When  is  a  person  entitled  to  salvage  ?  What  amount  is  usually 
allowed  ?     How  is  the  amount  regulated  ? 

364.  What  is  the  substance  and  wording  of  the  contract  given 
in  form  No.  68  ? 

STOPPAGE  IX  TEAXSITU. 

365.  What  is  the  right  of  stoppage  in  transitu  based  upon? 
What  does  it  depend  upon  ?     What  is  it  the  extension  of  ? 

366.  How  many  necessary  conditions  are  there  to  establish  the 
right  ?  What  is  the  first  condition  ?  What  the  second  ?  The 
third  ?  Can  the  person  who  has  guaranteed  the  payment  stop 
the  goods  ? 

367.  Who  only  can  generally  stop  the  goods?  Can  a  person 
other  than  the  ultimate  vendor  stop  the  goods?  May  a  person 
who  sends  goods  to  be  sold  on  joint  account  ? 

368.  What  kind  of  insolvency  is  sufficient  to  give  the  ri^ht? 
Is  the  fact  of  his  acceptances  being  dishonored  sufficient  ?  Is 
the  contract  entirely  broken  when  the  stoppage  is  effected? 
What  may  the  vendee  do  ?    What  may  the  vendor  sometimes  do  ? 


Who  takes  the  responsibility  when  goods  are  stopped  ?     What 
can  the  vendee  do  if  the  goods  are  wrongfully  stopped  ? 

369.  Where  must  the  goods  be  when  stopped  ?  If  they  have 
been  delivered  can  there  bo  any  such  right  ?  What  kind  of 
delivery  is  sufficient  to  destroy  the  right  ?  May  the  vendee  meet 
the  goods  and  take  possession  and  thereby  destroy  the  right  ? 

370.  When  is  the  transit  ended  so  as  to  destroy  the  right? 
Must  the  vendee  have  actual  possession  ?  When  will  constructive 
possession  be  sufficient  ?  When  is  the  transit  always  ended  ? 
Can  the  right  be  exercised  while  the  goods  are  in  a  general 
warehouse  ? 

371.  Must  the  vendor  make  the  stoppage  himself  ?  Who  may 
do  it  for  him  ?  Can  a  stoppage  be  made  by  giving  notice  to  the 
carrier  ? 

372.  Is  the  sale  rescinded  by  the  stoppage?  How  does  the 
vendor  hold  the  goods  ?  What  may  the  vendee  do  ?  What  may 
the  vendor  do  ? 

AGEISTCY. 

373.  What  is  an  agency  ?  What  is  rendered  necessary  by  the 
magnitude  of  business  ?  What  is  the  general  rule  as  to  the  right 
of  a  person  to  appoint  an  agent  ?  What  is  the  contract  betw^een 
the  principal  and  agent  in  the  nature  of  ?  When  legally  authorized, 
what  is  the  act  of  the  agent  ? 

374.  How  is  an  agency  created?  How  must  an  agency  to 
convey  land  be  established  ?  For  ordinary  contracts  how  may 
the  appointment  be  ? 

375.  Whom  may  the  principal  appoint?  Can  a  person  act  as 
agent  who  cannot  do  business  for  himself?  What  is  the  reason 
of  this  ?  Can  a  principal  delegate  authority  to  an  agent  to  do 
an  unlawful  act  ?  Can  he  appoint  an  agent  to  do  a  thing  which 
was  confided  to  him  as  a  personal  trust  ? 

376.  How  may  the  agent  receive  his  authority?  What  if  a 
principal  allow  another  person  to  do  acts  in  his  name  when  he  is 
cognizant  of  the  fact  ?  What  is  a  verbal  appointment  sufficient 
for? 

377.  Can  one  of  several  principals,  who  are  tenants  in  common, 
appoint  an  agent  to  do  business  for  all?  Can  a  partner  appoint 
an  agent  for  the  partnership  ? 


^•r 


36 


COMMERCIAL    LAW    AXD    BUSINESS    FORMS. 


%A 


378.  Where  several  persons  are  appointed  by  law  to  do  some- 
thing, must  they  all  act  together?  When  goods  are  shipped  to 
two  factors  for  sale,  may  one  sell  without  the  consent  of  the 
other?  Where  a  partnership  is  appointed  as  agents  may  one 
partner  act  ? 

379.  What  is  the  extent  of  the  agent's  authority  to  bind  the 
principal  to  be  gathered  from  ?  If  an  agent  exceed  the  power 
given  him  will  the  principal  be  bound  ?  How  may  authority  be 
sometimes  implied?  What  if  an  act  be  done  without  authoritv 
and  the  principal  take  the  benefit  of  it  ? 

380.  How  manv  kind  of  afjency  are  there  ?     What  are  thev  ? 

381.  What  is  a  special  agency?  Does  limiting  the  authority 
to  a  particular  business  make  it  a  special  agency  ?  What  should 
a  person  do  who  deals  Avith  a  special  agent  ? 

382.  What  is  a  general  agency  ?  What  is  the  principal  bound 
by  in  a  general  aorencv?  If  an  aujent  is  instructed  not  to  warrant 
goods,  but  does  warrant  them,  is  the  principal  bound  ?  When 
would  he  be  bound  ? 

383.  What  is  a  limited  agency?     What  does  it  apply  to? 

384.  What  is  an  unlimited  agency  and  to  what  does  it  apply  ? 

385.  What  is  the  commercial  division  of  agency  ?  Who 
is  a  factor  ?  Wliat  is  he  often  called  ?  What  is  a  super- 
cargo ?  Does  a  factor  have  the  goods  in  his  possession? 
Does  he  have  any  interest  in  the  goods?  What  is  a  factor 
entitled  to  ? 

386.  Who  is  a  broker?  What  compensation  does  he  get? 
How  does  he  act  ?  Has  he  the  property  in  possession  ?  May  an 
agent  be  both  a  factor  and  a  broker  at  the  same  time  ? 

387.  How  are  written  instruments  crenerallv  construed  ?  Where 
a  person  is  appointed  to  sell  land  can  he  lease  it?  Wliere  an 
agent  is  appointed  to  get  a  l)ill  discounted,  what  may  lie  do? 
AVhen  the  appointment  of  an  agency  is  susceptible  of  a  different 
meaning  from  that  intended,  and  the  agent  is  thus  misled,  is 
the  principal  bound  ? 

388.  In  their  dealings  with  agents,  what  are  strangers  to  be 
governed  by  ?  Is  the  fact  of  a  person  being  a  special  agent 
sufficient  to  put  one  on  his  guard  ?  What  is  the  authority 
delegated  an  agent  by  the  principal  iniluenced  by?         * 


ll"' 


QUESTIONS   FOR    REVIEW. 


37 


389.  When  the  agent  receives  specific  instructions  from  his 
principal  what  must  he  do  ?  What  is  the  rule  as  to  loss  result- 
ing from  non-compliance  with  orders  ?  Will  a  slight  deviation 
make  the  agent  liable  ?  If  an  agent  is  instructed  to  buy  goods 
at  a  limited  price,  when  will  he  be  justified  in  paying  more? 
When  has  a  consignee  a  right  to  sell  goods  on  credit  ?  If  he  is 
appointed  to  sell,  can  he  barter  or  pledge  the  goods  ? 

390.  What  is  the  duty  of  an  agent  as  to  keeping  accounts? 
What  may  result  from  not  keeping  correct  accounts?  To  whom 
belongs  the  profit  made  by  an  agent  ?  Has  an  agent  any  right  to 
appropriate  the  interest  which  accumulates  on  his  principal's 
capital  ? 

391.  How  must  the  agent  keep  his  principal's  property  ?  What 
may  be  the  consequence  if  he  mix  it  with  his  own  ?  How  should 
he  deposit  his  principal's  money  ?  What  if  he  deposit  in  his  own 
name  and  the  bank  fail  ? 

392.  When  can  a  person  safely  pay  money  to  an  agent  ?  When 
money  is  paid  to  an  agent  on  a  written  instrument,  what  should 
be  required  of  the  agent  ?  If  goods  are  bought  of  a  factor  is  the 
purchaser  safe  in  paying  him  the  price  ?  AVhat  is  the  general 
rule  in  regard  to  the  right  of  a  broker  to  receive  money  ? 

393.  What  is  meant  by  a  del  credere  commission  ?  Is  it  similar 
to  a  guaranty  ? 

394.  When  losses  occur  in  consequence  of  violation  of  duty, 
or  negligence,  who  is  responsible  ?  When  an  agent  is  instructed 
to  obtain  insurance  and  neglects  to  do  so,  and  the  property  is  lost, 
who  sustains  the  loss  ?  When  a  person  is  appointed  to  buy  a 
certain  amount  of  stocks,  and  only  buys  a  part  of  it,  will  the 
principal  be  bound  for  the  quantity  purchased  ? 

395.  What  amount  of  skill  is  required  of  an  agent  ?  What  is 
ordinary  diligence  ?  AVhat  is  an  agent  bound  to  obey  ?  When 
is  an  agent  under  obligation  to  secure  insurance  ?  What  is  his 
liability  if  he  neglect  to  do  so  ?  Who  has  power  to  control  a 
consignment  ?     When  may  the  consignee  control  it  ? 

396.  What  is  an  agent  sometimes  liable  for?  What  is  his 
liability  if  he  receive  money  and  misapply  it  ?  How  otherwise  is 
he  liable  ?  If  an  agent  is  directed  to  do  an  act  which  would  not 
result  in  any  benefit  to  the  principal  and  he  neglect  it,  is  he  liable  ? 


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COMMERCIAL    LAW    AND    Bt'SIXESS    FORMS. 


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397.  Can  a  person  act  as  agent  for  both  parties  in  a  transaction  ? 
Can  he  buy  gootls  for  one  party  Avhen  he  was  acting  as  agent  to 
sell  them  for  another  ? 

398.  What  position  does  a  factor  occupy  ?  What  is  he  liable 
to  his  principal  for  ? 

399.  WTien  must  he  account  for  the  price  of  goods  which  he 
has  sold  ?     What  exceptions  to  the  rule  are  given  ? 

400.  When  does  an  agent  avoid  personal  liability  ?  When 
does  he  make  himself  liable?  When  is  he  always  liable? 
What  is  an  agent  liable  to  his  principal  only  for?  What  is  he 
liable  to  third  persons  for  ?  When  can  an  agent  refuse  to  deliver 
goods  to  the  rightful  owner  ? 

401.  What  is  an  agent  entitled  to?  IIow  may  the  amount  of 
his  commission  be  determined  ?  What  right  is  given  him  to 
secure  him  his  commission  ?  What  is  he  entitled  to  beside  com- 
mission ? 

402.  What  is  the  principal  bound  by  ?  What  may  the  prin- 
cipal do  ? 

403.  What  is  the  principal  liable  to  third  persons  for  ?  When 
only  can  the  principal  be  held  liable  for  the  torts  of  the  agent? 

404.  If  a  third  person  suffer  from  a  wrong  perpetrated  by  the 
agent,  which  was  ordered  by  the  principal,  who  will  be  liable  ? 
Is  the  agent  bound  to  do  an  unlawful  act  because  he  is  directed  to  ? 

405.  Can  an  agent  generally  appoint  sub-agents?  "When  may 
he  do  so  ? 

406.  When  is  the  principal  liable  for  representations  made  by 
the  assent  ? 

407.  When  is  a  notice  to  an  agent  equivalent  to  a  notice  to  the 
principal?  At  what  time  must  such  notice  be?  What  would 
be  considered  notice  to  a  bank?  If  knowledge  is  acquired  by  an 
agent,  when  would  it  be  considered  as  notice  to  the  principal  ? 
What  is  the  rule  as  to  sufficiency  of  notice  ? 

408.  How  may  the  principal's  liability  be  affected  by  purchases 
made  by  his  agent?  What  if  an  agent  represent  himself  as 
principal  when  buying? 

409.  What  is  the  effect  of  delivering  goods  to  the  general 
agent  of  the  purchaser  ?  Is  the  right  of  stoppage  destroyed  if 
the  goods  are  delivered  to  a  common  carrier  ? 


I 


QUESTIONS    FOR    REVIEW. 


39 


410.  When  can  money  paid  by  an  agent  be  recovered  back  by 
the  principal  ? 

411.  In  what  different  ways  may  an  agency  be  dissolved  ? 

412.  When  may  the  principal  revoke  his  authority?  When 
can  it  not  be  revoked  unless  there  was  an  express  agreement 
that  it  might  be  ?  When  can  it  not  be  revoked  without  making 
the  principal  liable  ? 

413.  IIow  may  the  principal  revoke  his  authority?  May  it 
ever  be  implied  from  the  acts  of  the  agent  ?  When  may  it  be  so 
ira})lied?   As  to  the  agent,  when  does  the  revocation  take  place? 

414.  When  can  an  agent  renounce  the  authority  of  the  princi- 
pal ?     What  will  he  be  liable  for  ? 

415.  IIow  may  an  agency  be  terminated  by  operation  of  law  f 
Where  the  authority  is  terminated  by  the  death  of  the  principal, 
when  do  the  acts  of  the  agent  become  void  ?  What  exception  to 
this  rule  ? 

416.  AVhat  should  be  clearly  stated  when  a  written  contract  is 
made  by  an  agent  for  his  principal  ?  How  should  such  contract 
be  signed  ?  Where  an  agent  is  directed  to  get  a  note  discounted, 
what  has  he  implied  authority  to  do  ?  How  may  a  person  bind 
himself  by  a  written  instrument  ? 

417.  What  is  the  contract  given  in  form  No.  69?  What  is 
the  object  of  a  power  of  attorney  ?  AVho  is  the  principal  in  this 
power  of  attorney  ?     Who  is  the  agent  ? 

418.  What  is  the  agreement  given  in  form  No.  70  ?  Who  are 
the  principal  parties  to  it?  What  are  the  principal  points  in 
the  agreement  ? 

PAETXEESHIP. 

4 1 9.  What  is  a  partnership  defined  to  be  ?  Is  it  essential  that  all 
the  partners  invest  capital  ?    What  is  it  important  to  inquire  into  ? 

420.  Is  community  of  profit  essential  ?  Where  each  contributes 
a  certain  amount  to  make  a  joint  purchase,  and  the  goods  are  to 
be  divided,  are  the  parties  partners  ?  In  order  to  make  a  partner- 
ship, what  must  there  be  ?  Can  there  be  a  partnership  if  one  is 
to  have  all  the  profit?  Is  it  essential  that  the  partners  share 
equally?  How  may  the  profit  be  divided?  Must  the  losses  be 
shared  equally  ? 


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COMMEKCIAL    LAW    AND    BUSINESS    FORMS. 


421.  May  a  person  be  liable  as  a  partner  when  he  is  not  a 
partner  ?  What  are  the  three  illustrations  ?  To  whom  will  the 
parties  be  liable  in  these  instances? 

422.  How  must  the  parties  share  profits  in  order  to  be  partners  ? 
What  sharing  is  sufficient  ?  How  may  the  amount  of  profits 
vary  ?  What  is  the  reason  of  this  ?  Is  one  a  partner  who  receives 
a  share  of  the  profits  as  a  compensation  for  his  services  ? 

423.  AVhat  is  necessary  as  to  assent?  What  is  it  governed  by, 
and  how  should  it  be  established  ? 

424.  Does  the  common  law  re<iuire  any  particular  forms  to 
constitute  a  partnership  ?  What  sort  of  contract  is  a  partnership  ? 
How  may  it  be  formed  ?  • 

425.  How  ought  partnership  contracts  to  be  made  ?  For  what 
reasons  ?  What  should  be  put  into  the  written  articles  ?  What 
is  the  presumption  when  the  articles  of  agreement  are  in  writing  ? 
What  will  the  partners  be  governed  by,  whether  the  agreement 
be  in  writing  or  be  verbal  ?  How  may  a  person,  not  a  partner, 
render  himself  liable  as  such? 

426.  What  is  an  express  contract  ?  What  is  the  important 
difference  between  a  written  and  a  parol  contract?  Are  they 
equally  binding  ? 

427.  When  will  the  law  establish  a  partnership  by  implication  ? 
What  illustration  ? 

428.  What  is  the  principal  object  to  be  secured  by  the  forma- 
tion of  a  partnership  ?  For  what  purposes  may  it  be  ?  May  it 
be  limited  to  a  single  adventure  ? 

429.  How  are  joint  stock  companies  organized  ?  What  are  the 
objects  to  be  secured  by  these  companies  ?  What  are  they  based 
upon  ? 

430.  What  is  the  proyisions  of  the  statute  of  New-York,  in 
regard  to  the  organization  of  joint  stock  companies?  What 
must  the  certificate  set  forth  ? 

431.  Where  must  the  certificate  be  filed?  What  does  the 
Secretary  of  State  do  as  soon  as  the  certificate  is  filed  ?  What 
does  this  certificate  empower  the  parties  to  do  ?  Give  illustra- 
tions of  joint  stock  companies  ?  Who  has  the  management  of 
these  companies?  AVhen  does  the  liability  of  each  member 
bcGjin  ? 


QUESTIONS    FOB   REVIEW. 


41 


432.  What  are  limited  partnerships  ?  How  are  they  regulated  ? 
May  all  the  partners  generally  be  limited  ?  What  is  required  by 
the  statute  ?  Does  the  name  of  a  limited  partner  appear  in  the 
partnership  ?     What  must  be  recorded  and  what  published  ? 

433.  How  many  kinds  of  partners  are  there  ?  What  are  they  ? 
Who  is  an  ostensible  partner  ?  Who  a  nominal  partner  ?  What 
is  meant  by  a  dormant  partner  ?  What  other  qualification  to  a 
partner. 

434.  Who  may  be  partners  ?  May  a  person  under  age  be  a 
partner  ?  Can  a  person  under  age  be  held  on  partnership  con- 
tracts? What  must  such  person  do  as  soon  as  he  becomes  of 
age. 

435.  Can  aliens  do  business  and  become  partners  ? 

436.  What  legal  rights  have  married  women  in  regard  to  carry- 
ing on  business  ? 

437.  How  long  may  partnerships  continue?  If  no  time  is 
fixed  what  may  be  done  ?  What  is  the  partnership  when  a 
specified  time  is  fixed?  What  does  the  death  of  a  partner 
generally  do? 

438.  What  is  a  partnership  when  created  like  ?  What  is  the 
partnership  ?  What  does  it  possess  ?  What  is  it  subject  to  ? 
What  does  the  partnership  usually  specify?  What  may  it  be 
confined  to  ?  What  should  the  agreement  always  specify  ?  If 
no  agreement  is  made  in  regard  to  division  of  profits  what  will 
the  law  presume  ? 

439.  What  are  the  sets  of  relations  involved  in  a  partnership  ? 
AVhat  kind  of  interest  does  each  partner  have  in  the  partnership  ? 
What  power  of  conveyance  has  each  partner  ?  What  amount  of 
indebtedness  may  each  partner  create  ?  Can  one  partner  bring 
an  action  at  law  against  another  for  any  service  performed  or 
omitted  in  partnership  matters  ?  What  does  each  partner  im- 
pliedly promise  ?  If  one  partner  take  all  the  responsibility  and 
do  all  the  work  can  he  recover  from  the  others  for  extra  services  ? 

440.  What  are  third  persons  dealing  with  the  partnership  pre- 
sumed to  know  ?  Can  a  third  person  receive  partnership  prop- 
erty to  apply  on  a  debt  of  one  of  the  partners  ?  Has  a  partner 
a  right  to  compound  a  debt  with  a  third  person  ?  Can  he  give 
a  debtor  time  without  consulting  the  other  partners  ? 


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441.  What  are  the  things  enumerated  which  a  partner  may 
do  ? 

442.  In  what  respect  is  a  partner  limited  in  binding  the  firm? 
Can  a  partner  release  a  contract  of  debt  which  was  given  under 
seal  ? 

443.  How  must  tlie  contract  generally  be  made  to  bind  the 
firm  ?  When  will  the  firm  be  bound  if  made  in  the  name  of  one 
of  the  partners?  What  instance  is  given?  How  if  the  con- 
tract is  made  for  the  benefit  and  in  the  name  of  one  of  the 
partners  ? 

444.  What  is  necessary  to  bind  the  partnership  beside  the 
contract  being  in  the  partnership  name  ?  What  instance  is  given 
where  the  partnership  would  not  be  liable  ?  If  a  thing  is  boui^ht 
which  might  after  a  time  be  used  by  the  partnership  will  itbe 
bound  by  the  contract  of  one  partner? 

445.  How  must  third  persons  deal  with  the  partnership  in 
order  to  bind  it?  AVhen  would  not  the  firm  be  bound?  Is 
the  partnership  bound  if  the  partner  intend  to  defraud  his 
copartners? 

446.  When  the  partnership  is  bound  is  each  partner  also  indi- 
vidually bound  ?  May  their  individual  property  be  taken  for  a 
partnership  debt?  What  may  this  liability  bring  about? 
What  property  must  individual  and  partnership  credkors  each 
take  first  ? 

447.  What  is  every  partner  liable  for?  Is  a  dormant  partner 
ever  liable  ?  AVhat  must  a  retiring  j^artner  do  to  escape  further 
liability  ?  What  is  a  real  partner  liable  for  until  notice  is  given  ? 
What  principle  does  this  lial)ility  result  from  ?  If  when  a  part- 
ner retires  he  leave  his  name  on  the  sign  what  will  he  be  liable 
for  ?  What  kind  of  notice  should  be  given  ?  Is  it  necessary  to 
give  notice  when  a  partnership  is  dissolved  by  the  death  of  one 
of  the  partners  ? 

448.  In  what  different  ways  may  a  partnership  be  dissolved  ? 

449.  May  any  partnership  be  dissolved  by  mutual  consent  of 
all  the  partners  ?     How  will  such  a  dissolution  be  held  ? 

450.  What  is  the  effect  of  specifying  that  a  partnership  shall 
terminate  at  a  certain  time?  What  if  the  partners  should  still 
continue  to  do  business  as  before  ? 


QUESTIONS    FOE   KEVIEW. 


43 


451.  What  effect  will  insolvency  of  one  of  the  partners  have 
on  the  partnership  ?     For  what  reason  ? 

452.  May  a  partner  renounce  his  connection  with  a  partner- 
ship? 

453.  In  what  different  ways  may  a  partnership  be  dissolved 
by  completion  of  the  business  ? 

454.  When  will  marriage  work  a  dissolution  of  a  partnership  ? 
For  what  reason  will  it  ? 

455.  Will  the  death  of  one  of  the  partners  generally  produce 
a  dissolution  ?     What  reason  is  given  ? 

456.  When  will  the  insanity  of  one  of  the  partners  produce  a 
dissolution  ? 

457.  On  what  grounds  will  a  court  sometimes  decree  a  dissolu- 
tion ?     Will  it  interfere  for  any  trivial  reason  ? 

458.  What  are  the  consequences  of  a  dissolution?  If  the 
partners  are  not  able  to  agree  upon  a  division  of  the  effects 
what  must  be  done  ? 

459.  What  is  the  substance  of  the  articles  of  copartnership 
given  in  form  No.  71  ? 

AGEEEMEJSTTS  FOE   PEESO^^AL 

SEEYICES. 

460.  What  is  every  employee  or  servant?  What  law  will 
generally  be  applicable  ?  What  are  all  agreements  to  work  for 
a  specified^  compensation  ?  When  must  the  contract  be  complied 
with?  When  the  hiring  is  general,  and  no  time  agreed  upon, 
how  is  it  considered  ? 

461.  How  is  the  time  usually  regulated  with  domestic  servants? 
When  has  either  party  a  right  to  terminate  the  contract  ? 

462.  When  is  there  an  im2)lied  promise  to  pay  for  services? 
If  there  is  no  agreement  as  to  amount  to  be  paid  what  is  the 
rule?  When  are  the  wages  generally  due?  How  much  must 
the  employer  pay  where  there  is  no  agreement  as  to  amount? 

463.  What  skill  is  required  of  the  emploj-ee  ?  If  his  services 
are  professional  what  is  the  rule?  If  a  mechanic  undertake  to 
make  a  thing  for  a  particular  purpose  what  may  be  required  of 
him  ?     What  kind  of  skill  is  required  of  a  domestic  servant  ? 


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COMMERCIAL   LAW   AND   BUSINESS   FORMS. 


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464.  Where  labor  and  services  are  employed,  what  care  must 
the  employee  take  of  the  property  ? 

465.  Where  the  engagement  is  for  a  year  what  is  the  em- 
ployer to  do  ?  If  he  discharges  the  employee  before  the  termi- 
nation of  the  year  will  his  liability  cease  at  the  time  of  the  dis- 
charge ?     How  might  his  liability  sometimes  be  reduced  ? 

466.  What  is  the  employee  bound  to  do?  Suppose  he  leave 
off  before  the  expiration  of  the  time  ?  If  he  hire  for  a  month 
and  leave  off  at  the  end  of  three  weeks  can  he  collect  any 
wages?  When  one  works  by  the  job  what  must  he  do 
before  he  can  collect  any  wages?  What  if  his  employer 
discharge  him  while  he  is  doing  his  work  properly?  If  a 
servant  disobey  a  just  and  reasonable  command  what  may  the 
employer  do  ? 

467.  What  right  does  a  mechanic  have  to  secure  payment  for 
his  services?     What  illustration  ? 

468.  When  has  either  party  a  right  to  terminate  the  contract 
without  giving  notice  ?  What  will  the  employee  be  entitled  to 
if  the  contract  is  dissolved  by  the  mutual  consent  of  both  parties 
before  the  time  expired  ?  If  the  employer  have  good  reasons  for 
discharging  the  employee  must  he  state  the  reason  ? 

469.  What  is  the  contract  embraced  in  form  No.  72  ?     • 

COPYEIGHT. 

470.  What  is  a  copyright  ?  For  what  length  of  time  is  this 
right  granted  ? 

471.  What  must  be  sent  to  the  librarian  of  Congress  ?  When 
must  thie  be  done  ?  What  may  the  printed  title  required  be  ? 
Upon  what  kind  of  paper  must  the  printed  title  be  ? 

472.  What  fees  are  required  to  secure  a  copyright  ? 

473.  What  must  be  sent  to  the  librarian  of  Congress,  and  within 
what  time  ? 

474.  What  notice,  and  how  must  it  be  given  to  make  the 
copyright  valid?  What  penalty  is  imposed  for  giving  a  fraud- 
ulent notice  ? 

475.  What  may  an  author  reserve  the  right  to  do  ? 

476.  How  long  does  a  copyright  hold  good  ? 


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QUESTIONS    FOR    REVIEW. 


45 


477.  How  may  a  renewal  be  secured,  and  for  what  length  of 
Ume? 

478.  How  soon  must  a  work  be  issued  after  it  is  copyrighted  ? 

479.  Is  a  copyright  assignable  in  law?    What  must  be  done 
when  an  assignment  is  made  ? 

480.  How  may  a  person  secure  a  duplicate  certificate  of  copy- 
right ? 

481.  What  must  be  done  when  a  book  is  published  in  more 
than  one  volume  ? 

482.  What  kind  of  description  must  be  given  to  secure  a  copy- 
right on  a  work  of  art  or  a  picture  ? 

483.  Can  copyrights  be  secured  on  trade-marks  or  labels? 

484.  What  must  each  applicant  for  a  copyright  state  distinctly  ? 
Is  an  affidavit  required  ? 

BAILMEI^TS. 

485.  What  is  a  bailment  ?    Who  are  the  parties  to  a  bailment? 

486.  What  may  the  subject-matter  consist  of?  Is  any  con- 
sideration necessary?  What  has  the  bailor  a  right  to  insist 
upon  ?  What  illustration  is  given  of  a  bailment  ?  How  does  a 
bailment  differ  from  barter  ? 

487.  What  are  the  different  kinds  of  bailment  enumerated? 
What  are  these  bailments  influenced  by  ?  For  whom  may  the 
benefit  be  ? 

488.  Where  the  bailor  receives  all  the  benefit,  what  kind  of 
diligence  is  required  of  the  bailee  ?  What  is  required  where  all 
the  benefit  is  for  bailee  ?  What  is  required  where  the  benefit  is 
for  both  parties?  What  is  ordinary  neglect?  What  is  gross 
neglect  ?     What  is  slight  neglect  ? 

489.  AMiat  is  a  deposit  ?  What  kind  of  undertaking  is  it  with 
the  bailee  ?  What  are  the  parties  to  the  deposit  called  ?  What 
does  the  depositary  undertake,  and  what  care  must  he  exercise 
over  the  property  ?  What  kind  of  property  may  be  deposited? 
Must  the  depositor  be  the  owner  of  the  thing  deposited? 
To  whom  is  the  benefit  ? 

490.  What  is  the  object  of  the  deposit  ?  Does  the  depositary 
receive   any  compensation?     Is  a  person  obliged   to  become  a 


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COMMERCIAL    LAW    AND    BUSINESS    FORMS. 


QUESTIONS   FOR   REVIEW. 


47 


I  : 


depositary?     May   one   become   a   depositary   without   express 
assent  ?    How  ? 

491.  Has  the  depositary  any  right  to  use  the  deposit?  When 
may  he  ? 

492.  What  must  the  depositary  do  when  called  upon  for  the 
deposit  ?  How  does  a  deposit  of  goods  differ  from  a  deposit  of 
money  ?  What  does  the  law  call  a  deposit  of  money  ?  What  may 
the  depositary  do  if  the  deposit  is  of  a  perishable  nature  ? 

493.  In  what  instances  is  the  depositary  excused  from  return- 
ing the  deposit  ? 

494.  Is  the  depositary  under  obligation  to  deliver  the  deposit 
to  the  owner  if  he  is  not  the  depositor  ?  Would  he  still  be  liable 
to  the  depositor  ? 

495.  If  the  depositary  refuse  to  deliver  the  goods  to  the 
depositor  without  good  reason  what  is  his  liability  ? 

496.  What  is  a  mandate  ?  Is  there  any  compensation  ?  IIow 
does  a  mandate  differ  from  a  deposit  ?  What  is  it  in  respect  to  ? 
How  is  it  made?  What  is  the  person  employing  called?  AVhat 
is  the  person  employed  called  ? 

497.  What  are  the  three  necessary  elements  in  the  composition 
of  mandate  ?  When  must  the  thing  be  done  ?  What  must  it 
have  respect  to  ?  Of  what  character  must  it  be  ?  Does  the 
mandatary  have  any  property  interest  in  the  thing?  What 
rights  has  he  ? 

498.  What  is  the  mandatary  responsible  for  ?  How  may  his 
responsibility  vary  ?  What  is  a  nonfeasance  ?  Why  is  a  person 
not  liable  if  the  undertaking  was  not  begun  ?  Wliat  is  a  misfea- 
sance? Why  is  a  person  liable  for  losses  occasioned  ])y  a  mis- 
feasance ?  What  amount  of  skill  must  a  mandatary  bring  to 
his  undertaking  ? 

499.  In  what  different  ways  may  a  mandate  be  terminated  ? 

500.  What  is  a  loan  for  use  ?  What  are  the  parties  called  ? 
To  whom  is  the  benefit?     What  is  the  borrower  not  liable  for? 

501.  Has  the  borrower  any  special  property  in  the  thing 
borrowed  ?  In  what  respect  is  its  use  limited  ?  Does  the  lender 
receive  any  compensation  ?  Who  receives  the  benefit  of  this 
bailment  ?  How  must  the  borrower  use  the  thing  borrowed  ? 
If  he  use  it  improperly  what  will  be  the  consequence  ? 


502.  What  amount  of  care  must  the  borrower  take  ?  What  if 
the  lender  know  that  the  borrower  is  a  careless  person  ?  Is  the 
borrower  liable  for  inevitable  accidents  ? 

503.  What  is  the  duty  of  the  lender?  What  in  regard  to 
defects  ?  Who  must  pay  the  ordinary  expenses  of  the  thing 
borrowed  ?     What  must  the  lender  pay  ? 

504.  What  is  a  pledge  ?  How  does  it  differ  from  a  mortgage  ? 
What  are  the  parties  called  ?  What  does  the  right  of  the  pledgee 
depend  upon  ?  What  must  the  pledge  be  for  ?  What  is  essen- 
tial to  a  pledge  ?     What  only  can  be  pledged  ? 

505.  Does  the  pledgee  have  a  special  property  in  the  pledge  ? 
What  if  he  voluntarily  give  up  the  pledge  ?  If  it  be  wrongfully 
taken  from  him  can  he  recover  it  ?  What  may  he  hold  the  pledge 
for  except  the  principal  debt  ?  For  whose  benefit  is  this  bailment  ? 

506.  What  are  the  rights  of  the  pledgee?  May  he  keep  the 
pledge  in  payment  of  the  debt  ?  When  only  can  he  sell  it  ? 
May  the  pledgee  use  the  pledge  ? 

507.  What  is  the  principal  right  of  the  pledgor  ?  How  long 
has  he  this  ricjht  ? 

508.  How  may  this  bailment  be  terminated  ? 

509.  What  is  the  bailment  of  hiring  ?  What  are  the  parties 
called  ?     What  does  the  hirer  do?     What  illustration  ? 

510.  What  are  the  duties  of  the  letter  to  hire  ?  What  must  he 
not  interfere  with  ?  What  can  he  do  if  the  hirer  misuses  the 
thing  hired?  What  action  may  he  bring?  Who  is  to  pay 
ordinary  expenses  ? 

511.  What  are  the  duties  of  the  hirer?  What  does  the  hirer 
buy  ?  What  care  must  he  take  of  the  property  ?  For  what  is 
he  liable  ?  When  is  he  liable  for  the  acts  of  his  servants  ?  How 
must  he  uce  the  bailment  ?     In  what  condition  must  he  return  it  ? 

riEE  insuea:nce. 

512.  What  is  the  contract  of  fire  insurance  one  of?  How  is 
the  business  of  insurance  mostly  carried  on  ?  What  is  the  con- 
tract of  insurance  called?  Who  is  the  msurer?  How  is  the 
word  underwriter  used?  What  is  the  owner  of  th^  property 
called  ? 


48 


COMMERCIAL    LAW    AND    BUSINESS    FOEMS. 


1  ; 


# 


513.  What  is  the  object  in  securing  insurance  ?  How  does  the 
business  man  find  relief  from  the  fear  of  loss  by  fire  ?  What 
have  insurers  done  ? 

514.  What  is  the  first  step  towards  securing  insurance  ?  What 
should  the  application  contain?  What  are  some  of  the  most 
important  facts  for  the  insurers  to  know  ?  How  must  questions 
be  answered  by  the  applicant  ?  If  the  application  is  satisfactory 
what  will  the  insurers  do  ? 

515.  What  agreement  does  the  policy  contain  ?  What  is  the 
consideration  which  is  paid  by  the  insured  called  ?  Is  the  pre- 
mium to  be  paid  at  all  events  ?  How  and  when  may  it  be  paid  ? 
What  must  be  mentioned  in  the  policy?  How  is  the  policy 
usuallv  made  ? 

516.  What  is  the  usual  time  for  which  insurance  is  made? 
What  must  be  stated  with  precision?  When  the  time  of  insur- 
ance expires  how  is  it  usually  renewed  ?  What  does  the  ticket 
of  renewal  contain  ?     Is  it  as  binding  as  a  new  policy? 

517.  What  is  the  premium  and  how  is  it  usually  paid  ?  What 
if  there  are  any  conditions  in  regard  to  the  payment  of  the 
premium  ? 

518.  What  is  an  insurable  interest?  What  is  meant  by  the 
extent  of  one's  interest  ?  What  is  a  safeguard  to  the  insurer  ? 
Who  may  secure  insurance  ? 

519.  What  are  insurance  policies  full  of  ?  What  are  some  of 
the  quotations? 

520.  How  many  kinds  of  policies  are  there  ?  What  is  a  valued 
policy?  What  is  an  open  policy?  What  does  the  policy  gen- 
erally provide  for  ? 

521.  How  is  the  amount  of  insurance  regulated  ?  Why  can- 
not a  person  secure  insurance  for  any  amount?  What  do  pru- 
dent companies  limit  themselves  to  ?  What  is  the  extreme 
amount  insured  ?  What  may  be  done  to  procure  sufl[icient  in- 
demnity on  valuable  property?  Where  insurance  is  obtained 
in  several  companies  and  a  loss  occurs  how  is  it  paid  ? 

522.  How  is  insurance  usually  carried  on  ?  How  does  a  person 
become  a  stockholder  ?    What  is  the  capital  secured  by  ? 

523.  How  is  a  settlement  of  losses  made  ?  What  is  the  quota- 
tion given  ? 


;-* 


INDEX. 


CONTRACTS. 


PAGE. 

What  contract  is, •  17 

Elements  of  contract, 17 

Persons, 17 

Ability 17 

Assent •  •  18 

Proposition 18 

Option  or  refusal,  18 

Sales  on  trial 19 

Revocation  of  option 19 

Proposition  by  letter,  20 

Acceptance,  20 

Express  assent 20 

Implied  assent,  20 

Mistake  of  Law,  21 

Refusal  of  proposition,  21 

Parties  bound 21 

Mistake  of  fact , 21 

Consideration,  22 

Valuable  consideration,  22 

Good  consideration,  22 

Sufficiency  of  consideration, 22 

Forbearance,  23 

Mutual  promises,  23 

Moral  obligation,  23 

Statute  of  frauds,  23 

Things  to  be  done  or  omitted,  24 

Void  on  account  of  fraud,  24 


PAGE. 

Contracts  in  restraint  of  trad»,  25 

Contracts  void  for  other  causes,     25 

Construction  of  contracts,  25 

Defenses  to  contracts,  26 

Performance,      26 

Manner  of  performance, 26 

Time  of  performance,  26 

Place  of  performance,  27 

Non-performance,  27 

Payment,  27 

Giving  his  owoi  negotiable  security,  28 

Note  or  bill  of  third  person,  ."^S 

Receipts,  28 

Accord  and  satisfaction,  28 

Arbitrament  and  award,  29 

Pendency  of  another  action,  29 

Release, ,  29 

Tender,   30 

Statute  of  limitations,  80 

Set-off, 32 

Recoupment,  . .  82 

Contract  of  building,  32 

Contract  for  land,  33 

Contract  with  a  clerk 34 

Contract  for  sale  of  personal  property,  .  35 

Contract  for  sale  of  farm  and  mill,  35 


NEGOTIABLE    PAPER. 


What  negotiable  paper  is,  36 

Its  origin,   36 

Negotiability,  86 

Promise  to  pay,     87 

Promissory  notes,  87 

Responsibility  of  maker 88 

Subsequent  party,  38 

In  good  faith,  88 

Transfer  after  maturity,  39 

Manner  of  transferring,  89 

Date,    40 

Person,    40 

Amount,  40 

Consideration 41 


Form,    41 

Negotiable  promissory  note,  42 

Note  not  negotiable,  43 

Payee,  42 

Maker,  43 

Due  bill,  43 

Due  bill  for  money,  43 

Due  bill  for  goods,  43 

Draft,  form  of  44 

Bill  of  exchange,  44 

Inland  bill,  44 

Foreign  bill,  44 

Form  of  draft,  44 

Draft,  form  of, 45 


49 


i 


!! 


50 


INDEX. 


NEGOTIABLE   PAP  EH -Continued. 


PAGE. 

Parties............ 45 

Number, ., 45 

Theory  of  draft    45 

Liability  of  parties, 4;; 

Acceptance, 4^ 

Form  of  acceptance, 47 

Illastration  of  acceptance,  47 

Presentment  for  acceptance, 4S 

Non-acceptance, 43 

Protest, 43 

Illustration  of  draft,  49 

Illustration  of  protest, 49 

Notice  of  non-aoceptance 50 

Illustration  of  notice  of  protest, 51 

Acceptance,  supra  protest 51 

Illustration  of  draft, 50 

Bank  depositors, 53 

Methods  of  depositing, k 

Bank  book, 5.3 

Checks  paid, 54 

Deposit  tickets, 54 

Illustration  of  deposit  ticket, 55 

Checks, 55 

Illnstration  of  check, 56 

Checks  as  receipts, 55 

Certified  checks, 56 

Illustration  of  check, 57 

Cash  checks, 57 

Forged  checks,  58 

Raised  checks, 53 

When  payable, 53 

Certificate  of  deposit, 59 

Illustration  of  cenificate  of  deposit, 59 

Teller's  check, 59 

Special  deposit, (jo 

Certificate  of  stock, 60 

Illustration  of  certificate  of  stock, 60 

Voting  by  proxy, 60 

Power  of  attorney  to  vote 61 

Transfer  of  stock, 61 

Appointing  attorney  to  transfer, 61 

Foreign  bills  of  exchange 61 

Illustration  of  bills  of  exchange 62 

Protest  and  notice, 63 

Business  paper 63 

Accommodation  paper, 63 

Value  received, 64 

Order  or  bearer, 64 

Maker  of  note, 65 

Individual  note 65- 

Illustration  of  note, 65 

Joint  note, §5 

Illnstration  of  joint  note 65 

•oint  and  several  notes 66 


Page. 

Illustration  of  joint  and  several  notes, . .  66 

Firm  notes, 66 

Interest  notes, 67 

Indorsements,  57 

Effects  of  indorsements, 67 

Liability  of  indorser 67 

Forms  of  indorsement, 68 

Blank  indorsement, 68 

Full  indorsement, 69 

Note  and  indorsements, 59 

Individual  note, 69 

Illustration  of  blank  indorsement, 70 

Iliustration  of  full  indorsement, 70 

General  indorsement 70 

Qualified  indorsement, 70 

Negotiable  draft 71 

Illustration  of  general  indorsement, 71 

Illustration  of  qualified  indorsement, ...  71 

Conditional  indorsement, 71 

Restrictive  indorsement, .,,,  72 

Bank  draft, 70 

Illustration  of  conditional  indorsement,  73 

Illustration  of  restrictive  indorsement,. .  73 

Indorsement  before  maturity 73 

Indorsement  after  maturity, 73 

Indorsement  revocable, 74 

Indorsement  admissible 74 

Necessity  of  protesting, 74 

Written  or  verbal  notice 75 

Kind  of  notice, 75 

Liable  without  notice 76 

Days  of  grace 75 

Maturity  of  negotiable  paper, 76 

Presentation  for  payment, 79 

Place  of  presentment 75 

Protest  for  non-payment,  79 

Negotiable  note, 79 

Indorsements, 79 

Protest 80 

Accommodation  drafts, gl 

Forged  paper, gj 

Want  of  consideration, gj 

Stolen  or  lost  paper, gj 

Rights  before  maturity, gj 

Laws  of  the  State, g2 

Collateral  security, go 

In  payment  of  debt, gQ 

Receipt  as  payment, g3 

Receipt  on  account, g4 

Bank  notes, gj 

Bank  of  North  America, g4 

Continental  money, g4 

State  banks, g5 

National  banks,  §5 


INDEX. 


NEGOTIABLE  PAPEU^ Continued, 


51 


PAGE. 

TVicecfnatioTifll  bank  bill ...  86 

Back  of  national  bank  bill, 86 

Legal  tender, 86 

Face  of  treasury  note, 87 

Back  of  treasury  note,  87 

Letter  of  credit, g7 

Foreign  letter  of  credit,  88 

Inland  letter  of  credit, gg 

Form  of  inland  letter  of  credit 89 

Form  of  inland  letter  of  credit 90 

Bill  of  lading 90 

Illustration  of  bill  of  lading,  91 


Page. 

Ownership 92 

Illustration  of  draft,  92 

Counterfeit  bank  bills,     93 

Debtor  and  creditor,  98 

Duty  of  debtor, 92 

Duty  of  creditor,  93 

General  depositor,. .   93 

Oral,  93 

Parol,  94 

Receipt  94 

Seals,   .  .     94 

Specialty,     94 


LEGAL  DECISIONS   I 

Impersonal  payee, 

Promise  to  accept  draft,  

Check  post-dated, 

Procuring  signature  by  fraud,  

Wrongful  conversion  of  note 

Deceased  maker  of  note,  

Non-negotiable  note,  

Immaterial  alteration  of  note 

Accommodation  paper,     . .    

Official  signature,  

Gift  of  notes, 

Rate  of  interest  after  maturity,  

Consideration,   , 


N  MISCELLANEOUS    CASES. 


95 
95 
95 
95 
96 
96 
96 
96 
97 
97 
97 
97 
97 


SALE   OF  PERSO 

Contract  of  sale,  105 

Sale,   105 

Subject-matter, 105 

Mere  possibility,  ...  106 

Legal  subject-matter,  106 

Price,   106 

Consent  of  parties,  107 

Mode  of  making  contract,  107 

Statute  of  frauds  generally 107 

Application  of  statute, log 

Transit  of  goods,  • no 

Possession  by  vendor,  no 

Entire  or  severable  contract,  m 

Conditional  sales,  m 

Disclosare  of  facts,  112  i 


Conditional  draft,  97 

Note  at  variance  with  statute, 98 

Note  with  illegal  consideration,  98 

Diligence  in  giving  notice 99 

Obtaining  note  by  fraud,  99 

Joint  and  several  note, 99 

Statute  of  Ohio,  99 

Indorsement,  100 

Where  bills  of  exchange  are  payable,  . .  100 

Payment, lOl 

Evidence  of  payment,  lOl 

Piling  of  papci'?,   . .  101 

Copying  letters,  loi 

NAL  PROPERTY. 

Stolen  goods,  n* 

Place  of  delivery,  us 

Sale  of  "good-will,"  113 

Delivery,  113 

Necessary  delivery,   I13 

Effect  of  sale,  114 

Specific  property,  114 

Title  to  goods  sold,  115 

Care  of  goods,  115 

Bill  of  parcels,  115 

Bill  of  sale,  116 

Bill  of  sale  with  warranty,  117 

Chattel  mortgage,  118 

Chattel  mortgage  sale,  180 


WARRANTY. 


Sales  with  warranty,  121 

General  warranty, 121 

Express  warranty,  121 

Special  warranty,  .   121 

Implied  warranty, 123 


Breach  of  warranty 128 

Sales  by  sample,  128 

Descriptive  bill  of  sale, 123 

Executory  warranty,  123 

Warranty  against  defects,  12.^ 


J  . 
I ' 

if  I 


4 


52 


1  i 


f    I 


a 


« 


! 


INDEX, 


GUARANTY. 


PAOB. 

(Tuaranty,  134 

Essentials,   124 

Consideration,    124 

Principal  debtor 124 

Consent  of  creditor,   125 

Liability  of  principal,  125 

Statute  of  frauds 126 

Liability  renewed,  126 

Negotiability  of  guaranty,  127 

Guaranty  construed 127 

Illustrations  of  guaranty,  127 

Liability  of  guarantor,  128 

Creditor's  right, . .  128 


rxam. 

Discharge  of  guarantor, 129 

Want  of  notice 129 

Expiration  of  time, 189 

Alteration  of  contract, 120 

Release 129 

Merger, 180 

Giving  time, 130 

Fraud 130 

Extinguishment,    180 

Rights  against  creditor, 180 

Rights  against  principal, 181 

Rights  against  co-surety, 181 

Forms  of  guaranty, 181 


LIEN. 


Lien,  what  it  is 132 

Delivery  of  part, 132 

Equitable  lien, 133 

Lien  of  agent 133 

Lien  of  mechanic, 133 


Lien  of  common  carrier, 184 

Lien  of  bailees, 1** 

Lien  of  innkeepers, 184 

Termination  of  lien, 134 

Continuance  of  lien, 186 


COMMON   CARRIERS. 


Common  carrier, 136 

Carries  for  all 136 

Carries  for  hire 136 

Standing  offer 137 

Private  carrier 137 

Liability  of  carrier,  137 

Acceptance  of  goods,  138 

Successive  companies 138 

Railroad  receipt,  139 


Care  of  goods 140 

Restricted  liabilUy 140 

Termination  of  liability, 141 

Place  of  delivery, 141 

Delivery  to  right  person, 141 

Warehouseman 141 

Person  to  pay  freight,  141 

Lien  of  carrier, 142 


SHIPPING. 


Shipping,  what  it  is, 143 

Ship  owner, 14^^ 

Owner  of  goods, 143 

Charter  party, 144 

Gksneral  ship 144 

BUI  of  lading, 144 

Duties  of  ship  o\vner, 145 


Duties  of  merchant, 145 

Maritime  loan, 140 

General  average, 146 

Contributing  interests, 147 

Salvage,  14~ 

Charter  party,  form,  148 


STOPPAGE  IN  TRANSITU. 


Necessary  conditions,  149 

Vendor,  14^ 

Insolvency,    — 1^ 

Goods  in  transit,  •   150 


Transit  terminated 151 

Stoppage  by  notice,  151 

Effect  of  stoppage,  151 


!« 


INDEX. 


AGENCY. 


53 


PAGE. 

How  created 152 

Principal,   152 

Agent, 153 

Several  principals,  153 

Several  agents,  153 

Agent's  authority 153 

Kinds  of  agency,  154 

Special  agency,  154 

General  agency, 154 

Limited  agency,  154 

Unlimited  agency,  154 

Factor,   155 

Broker,     155 

Rules  of  construction,  155 

Strangers  governed  by,  156 

Specific  instructions,  156 

Accounts  and  vouchers 157 

Separate  property,  157 

Authority  to  receive  money,  157 

Del  credere  commission, 158 

Violation  of  duty 158 

Duties  of  agent,  159 

Liability  of  agent,  159 


PAGE. 

Adverse  party,  , .  .  160 

Agent  a  bailee,  .  160 

When  account  for  price,  160 

Personal  liability, 160 

Rights  of  agent,  . .    . .  161 

Rights  of  principal,  161 

Liability  of  principal, IGl 

Wrong  commanded,  161 

Sub-agents,  162 

Representations  of  agent,  162 

Notice  to  agent,  162 

Purchases  made  by  agent,  162 

Delivery  to  agent, 163 

Money  paid  agent 163 

Dissolution  of  agency,  168 

Revocation 163 

How  done,  164 

Renunciation,  164 

Operation  of  law,  164 

Written  contract  by  agent,  164 

Power  of  attorney 165 

Sale  of  manufactory,  I66 


PARTNERSHIP. 


Community  of  profit,  167 

Partners,  168 

Profits  as  principals,  168 

Mutual  assent,  I68 

How  formed,   168 

Written  articles,  1C9 

Verbal  agreement,  169 

Implied  agreement, 169 

Objects  of  partnership, 169 

Joint  stock  company, 170 

Statute  of  New-York, 170 

License, 170 

Limited  partnership, 171 

Kinds  of  partners, 171 

Who  may  be  partners, 173 

Aliens, 170 

Married  women, : 172 

Duration  of  partnership, 172 

Relations  of  partnership, 173 

Relation  of  partners, ; 173 


Relations  of  third  persons, I74 

Powers  of  partners, 174 

Mode  of  binding 174 

Name  of  partnership, 174 

Account  of  partnership 175 

Good  faith, 175 

Jointly  and  severally  binding, 175 

Retiring  partner's  liability, 175 

Dissolution, 176 

By  mutual  consent, 177 

Expiration  of  time, 177 

By  insolvency, 177 

By  act  of  partner, 177 

Completion  of  business, 177 

By  marriage, 177 

By  death, 173 

By  insanity, 173 

By  decree  of  Court, 173 

Consequences  of, 173 

Articles  of  copartnership, 173 


AGREEMENTS    FOR   PERSONAL   SERVICES. 

Services  and  wages, I8I 

Domestic  servants isi 

Compensation, igi 

Necessary  skill,    i82 

'Ordinary  care, 132 


Duties  of  employer, 132 

Duties  of  employee, i83 

Lien  for  services, ig;] 

Termination  of  services, 134 

Contract  for  hiring, 134 


o4 


INDEX. 


COPYRIGHT. 


rl 


FAGE. 

Printed  title 185 

Fees, 185 

Copy  of  books. 185 

Notice  of  copyright, 186 

Translations, 186 

Duration 186 

Renewals, 187 


PAGE. 

Time  of  pnblication, 187 

Assignment, 187 

Duplicate  certificate, 187 

Separate  publications, 187 

Works  of  art, 187 

Labels, 188 

Full  name, 188 


BAILMENTS. 


Subject-matter, 189 

Different  kinds 189 

Diligence  and  neglect,  190 

Deposit, 190 

Specific  object,  190 

Use  of  deposit,  191 

Ileturn  of  deposit,  191 

Excused  from  returning,  191 

Delivery  to  owner,  191 

Liability  of  depositary,     191 

Mandate,  102 

Elements  of  mandate,  192 

Liability  of  mandatary,  192 


Terminating  the  contract,  193 

Loan  for  use,  193 

Use  restricted, 193 

Diligence  required,  194 

Duty  to  lender,  194 

Pledge, 194 

Special  property,  195 

Rights  of  pledgee 195 

Rights  of  pledgor,  195 

Termination,  195 

Hiring 195 

Duties  of  letter  to  hire,  l&o 

Duties  of  hirer,  196 


FIRE   INSURANCE, 


Importance  of, 198 

Application  for 193 

Policy, 199 

Time 199 

Premium 200 

Insurable  interest, 200 


Conditions, 200 

Valued  and  open  policies 2<11 

Amount  insured, 201 

Stock  companies, 203 

Settlement  of  losses, 202 


t    : 


'— nmn  iiiin  iin'nni 


\ 


BRYANT'S  NEW  SERIES  BOOK-KEEPING. 


n  nil    0.^^. 


COMMON  SCHOOL  BOOK-KEEPiKG. 

m  SmGLE  AM)  DOUBLE  ENTRY, 

With  full  description  and  illustration  of  business  forms,  consisting  of  Notes, 
Drafts,  Checks,  Orders,  Receipts,  Bills,  Invoices,  Account  Sales,  etc. 

FOR  PRIMARY  INSTRUCTION  IN  ALL  SCHOOLS,  AND  FOR  SELP-INSTRUCTIO:.'. 


-•-♦-^ 


ELEMENTARY  BOOK-KEEPiXG. 

Contains  full  definitions  and  illustrations  of  the  elementary  principles  of  Double 
Entry  Book-Keeping,  with  practical  application  to  the  details  of  business,  cm 
bracing  fourteen  complete  Sets  of  Books.     Designed  for  Academies,  Normal 
Schools,  and  Theoretical  Departments  of  Commercial  and  Business  Colleges.     96 
pages;  two  colors,  stiff  cover. 


-^♦♦- 


COMMERCIAL  BOOK-KEEPING. 

Designed  for  Commercial  and  Business  Colleges,  Normal  and  High  Schools 
Universities,  etc.     Embracing  more  than  Twenty  Complete  Sets  of  Books    in 
Double  and  Single  Entry,  Wholesale  and  Retail  business  of  the  most  practical 
character.     Printed  on  No.  1,  60  lb.  tmted  paper,  and  containing  160  pages: 
two  colors;  cloth  cover. 


-*^-^ 


CODNTING-HOUSE  BOOK-KEEPING, 

CONTAINING 

Tfie   most   com^te  and   cortiprehermve   explanation    of  the  principUs   and 

practice  of  Double  and  Single  Entry  Book-keeping,  and  embracing   the 

most  practical  Sets  of  mxxlem  business.     Taken  directly  from  the 

most  approved  forms  of  the  largest  business  houses. 

It  contains  a  greater  variety  and  embraces  a  wider  scope  of  business  than  any 
other  work  yet  published,  and  will  be  found  invaluable  to  the  business  man  and 
to  the  student  who  wishes  to  pursue  an  extended  course  of  study  of  the  most 
modern  practical  form.  It  contains  all  that  is  embraced  in  the  Commercial  course, 
ana  in  addition  a  practical  ManufacturiiiLC  Set.  and  the  most  complete  and  thor. 
ough  set  of  modern  Banking  ever  published.  Printed  on  No.  1.  60  lb.  paper 
two  colors;  cloth  cover. 

J.  C.  BRYANT,  Publisher, 

BUFFALO.  N.  Y. 


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!  { 


COLUMBIA  UNIVERSITY   LIBRARIES 

This  book  is  due  on  the  date  indicated  below,  or  at  the 
expiration  of  a  definite  period  after  the  date  of  borrowing,  as 
provided  by  the  library  rules  or  by  special  arrangement  with 
the  Librarian  in  charge. 


DATE  BOHHOWtD 

DATE  DUE 

1 
DATE  BORROWCO 

DATE  DUE 

C28  (358)  lOOM 

r 


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COLUMBIA  UNIVERSITY 

l|ii-        'A\'''\<\"'         \  \  ill     I    IIIIIMII 


V-     V 


0032047460 


D150 


B84 


The  business  man^s  commercial  law 
&  business  forms. 


6-1-59     To  Bindexy 


J 


; 


-J^iiTH 


:Bg-y 


fEB  1  4 1994 


/^5//      0D0%(:, 


JUN  i6  1959 


OCT  2  8  1946 


NDOF 
TITLE 


